India, which has 1.4 billion people, is on the verge of potentially outnumbering China in terms of population. Leveraging its demographic advantage, the nation has diligently pursued ways to draw in foreign investment and boost the competitiveness of its industrial sector. With ambitions to beat Germany and Japan and rise to the third-largest economy in the world within five years, Prime Minister Narendra Modi has shown great faith in India’s manufacturing sector. He also hopes to see India become a developed nation by the year 2047. However, India’s quest to become the world’s next manufacturing powerhouse is facing substantial obstacles as it aims to catch up with China’s formidable manufacturing sector.

The leading cell phone manufacturer in the world, Apple, has been a pioneer in investing in India’s manufacturing capabilities. India’s abundant labour resources and its crucial position in the Indo-Pacific strategy have caught the interest of foreign-funded companies in the midst of trade tensions between the United States and China. Aligned with the Indian government’s objective of bolstering domestic manufacturing, Apple initiated the production of the iPhone SE in India in 2017. In cooperation with Foxconn, they established manufacturing plants aimed at producing iPhones, a strategic move that could create over 60,000 jobs. Subsequently, Apple has since transferred six production lines and eight foundries to India, further demonstrating its dedication to the Indian market.

Despite its vast potential, India’s manufacturing sector seems to be struggling with quality issues. According to reports, there were substantial quality problems with more than half of the iPhone 15 units made in India due to welding and assembly flaws. Apple’s pursuit of high-quality products clashed with the difficulties in India’s supply chain. On July 10, another significant setback occurred when Foxconn’s parent firm, Hon Hai Technology Group, announced its exit from a $19.5 billion semiconductor joint venture with the Vedanta group of India. This action caused a stir in the market and highlighted the difficulties faced by foreign companies making investments in India.

Although India offers enticing prospects, it is evident that Apple might continue to heavily rely on the Chinese market. China, which has the biggest smartphone market in the world, has historically been a stronghold for Apple, especially in the high-end sector. The company’s adaptability and China’s open marketplace have kept it profitable. Apple’s well-established supply chain in China, which is backed by cutting-edge technology and developed lab resources, is proof of the nation’s prowess in manufacturing. In contrast, India’s “Made in India” program, launched in 2014, sought to increase the GDP contribution of the manufacturing sector from 15% to 25% but appeared to struggle with issues like high investment risk and inward-focused policies. Replicating Apple’s success in India will be extremely difficult due to its existing huge manufacturing supply network in China. One of the biggest and most technologically advanced electronics manufacturing bases in the world is found in China, and it includes key industries including chip fabrication, battery manufacture, and display technology. These industries in India, in comparison, are still in their early phases and will require a lot of time and money to develop a comparable industrial ecosystem. Blindly moving manufacturing lines to India in an effort to cut labour costs could result in an unbridgeable capacity gap.

In conclusion, India’s attempt to compete with China’s dominance in the manufacturing sector is an ambitious project fraught with difficulties. India has enormous potential, which is fueled by its expanding market and population, but it also has challenges with the business environment, quality assurance, and the development of its industrial ecosystem. As Apple’s experience with the iPhone 15 shows, India’s manufacturing sector is still developing and will require ongoing work to catch up to China’s manufacturing prowess. The road to being the largest manufacturer in the world is surely difficult, but India’s tenacity and dedication to development may ultimately help it emerge as a strong competitor in the global manufacturing market.

By Jane Zhou