By Jite Philomena
For Tech Info News
In a move that could have far-reaching implications for India’s manufacturing ambitions and its trade relationship with the United States, the Biden administration has imposed new tariffs on iPhones assembled in India. The decision, announced as part of a broader recalibration of U.S. trade policies, marks a significant setback for Prime Minister Narendra Modi’s “Make in India” initiative and the country’s effort to become a global electronics manufacturing hub.
The new tax, which applies to smartphones assembled in India and exported to the U.S., includes a tariff hike of up to 10% on certain high-end devices. While the White House maintains the move is part of efforts to level the playing field and protect American industry, Indian officials have expressed concern over the impact on bilateral trade and investment flows.
Apple’s India Strategy in Jeopardy
Apple has invested heavily in India over the past few years, shifting part of its manufacturing base from China to reduce dependency amid rising geopolitical tensions and to benefit from India’s lower labor costs and government incentives. Major Apple suppliers such as Foxconn, Pegatron, and Wistron have been assembling iPhones in India, with an eye toward both the domestic market and export.
Industry analysts had hailed this shift as a win-win for Apple and India: the tech giant gained supply chain diversification, and India reaped the benefits of job creation and foreign investment. However, the new U.S. tax threatens to derail that momentum.
“This tariff introduces uncertainty at a time when India was finally becoming a serious player in the global electronics value chain,” said Rajiv Mehta, a Mumbai-based trade economist. “It sends a discouraging signal to both investors and the Modi government.”
A Blow to ‘Make in India’ and Modi’s Image
For Prime Minister Narendra Modi, the announcement is more than an economic hurdle — it’s a political blow. The “Make in India” campaign, launched in 2014, has been a cornerstone of his economic agenda. It seeks to transform India into a global manufacturing powerhouse, reduce import dependency, and create millions of jobs.
Modi’s recent outreach to global CEOs, including his much-publicized meetings with Apple CEO Tim Cook, were intended to showcase India’s readiness for business. The new tariff undermines those efforts and raises doubts about India’s position in global supply chains, especially as tensions rise between Western economies and China.
“This is a double-edged moment for Modi. While India is being recognized as a manufacturing alternative to China, it is also vulnerable to the protectionist tendencies of Western allies,” said Ananya Chatterjee, a senior policy analyst based in New Delhi.
Trade Relations Under Strain
The move may also strain U.S.-India trade ties, which have seen a mix of collaboration and friction in recent years. While defense and strategic partnerships have grown stronger, trade disputes over tariffs, digital services taxes, and agricultural imports have persisted.
India’s Commerce Ministry has yet to formally respond to the new iPhone tariffs, but sources say behind-the-scenes discussions with U.S. trade representatives are already underway. New Delhi is expected to seek a rollback or exemption, especially given its strategic importance in countering China’s influence in the Indo-Pacific.
The development also comes ahead of key elections in both countries — the U.S. presidential election in 2024 and India’s general election in 2026 — making trade diplomacy all the more delicate.
What’s Next for Apple and India’s Tech Industry?
Apple may face a tough decision: absorb the new tariff cost, pass it on to U.S. consumers, or scale back export operations from India. While the company has not issued a formal statement, insiders suggest that supply chain diversification will continue but with added caution.
For India, the challenge will be to reassure foreign investors that the country remains a stable and profitable base for manufacturing. The Modi government is expected to respond with new incentives and diplomatic efforts to mitigate the fallout.
The U.S. decision to impose new taxes on India-made iPhones is more than a trade policy adjustment — it’s a moment of reckoning for India’s economic ambitions under Prime Minister Modi. As the global economy grows more complex and geopolitical rivalries intensify, India must navigate an increasingly tricky path between opportunity and vulnerability.
Whether Modi can turn this setback into a strategic comeback remains to be seen, but the message is clear: in the global race for tech dominance and manufacturing leadership, no plan is immune to disruption.
