New Delhi
Even though America imposed 25 percent tariffs on iPhone made in India, its total production cost will be much less than making it in America. Global Trade Research Initiative (GTRI) claimed this in one of its reports. This information has been given by GTRI at a time when US President Donald Trump is in discussion due to a statement. In his statement, Trump has threatened that if Apple decides to make an iPhone in India, he will impose 25 percent tariff on it. However, GTRI believes that despite such charges, the construction of iPhones in India is more effective in terms of cost.
The report explained in detail about the current price chain of US $ 1,000 iPhone. According to the report, more than a dozen countries contribute to the construction of iPhone. Apple keeps the largest part of the price, around $ 450 per device through its brand, software and design. American component manufacturers such as Qualcomm and Broadcom go to about 80. While the Taiwan chip makes 150 US dollars. South Korea achieves $ 90 by making OLED screen and memory chips. Japan mainly prepares the camera system and supplies parts of $ 85. Germany, Vietnam and Malaysia contribute $ 45 by making many other small parts of small iPhones.
GTRI said that despite being a major player in the case of iPhone assembly, countries like China and India earn only about 30 dollars per device. This is less than 3 percent of the total retail value of an iPhone. The report states that even after 25 percent of tariffs are implemented, the construction of iPhone in India is financially rational. This is mainly due to a huge difference in remuneration cost in India and the US. In India, the iPhone assembled workers are able to earn around $ 230 every month. At the same time, if the company decides to make an iPhone in a state like California in America, it will be very expensive. Due to the minimum wage laws, the labor cost of the iPhone on making phones in the US will reach around 2,900 US $, which is 13 times more than its current labor cost.
It costs around $ 30 to assemble an iPhone in India, while the same process in the US will cost about $ 390. If Apple takes its production to America, every iPhone will decrease its profit from the current US $ 450 to only 60 US dollars. In such a situation, it will not be able to gain much from it without increasing retail prices. GTRI has said in its report how global value chains and labor cost differences make India a competitive option for manufacturing. According to GTRI, iPhone assembling in India is expected to remain effective despite the US possible trade sanctions.
