India's manufacturing shift

The finding

India has won the final-assembly layer of global smartphone manufacturing in about five years, while the components, tooling, and value that sit underneath it remain overwhelmingly Chinese and move on a decade clock that no policy has yet bent.

The assembly flip is measured in customs data. In the second quarter of 2025 India accounted for 44% of smartphones imported into the United States while China's share fell to 25%, reversing a 13%-against-61% split from a year earlier, on Canalys figures. The volume of made-in-India smartphones shipped to the US grew 240% year over year in that quarter. Apple now assembles about a quarter of all iPhones in India, and assembled about 55 million iPhones there in 2025, up roughly 53% from about 36 million the year before.

Value capture reads the other way. India keeps roughly 20% of the export value it books on industry estimates of domestic value addition, and closer to 6% on the Global Trade Research Initiative's stricter count, which nets out the imported parts first and works out at about $30 of a $500 iPhone leaving the factory gate. Roughly 71% of the component shipments for those phones arrive from China. On Farok Contractor's teardown of an iPhone 16, Apple pays Foxconn about $14 for final assembly on a $563.73 total manufacturing cost.

The capital that would turn assembly into a domestic supply chain moved the other way. Net foreign direct investment fell from $44 billion in fiscal 2020-21 to $0.96 billion in fiscal 2024-25, before recovering to just $7.6 billion in fiscal 2025-26 on Reserve Bank of India figures. Manufacturing's real output nearly doubled over the decade to 2025, yet its share of GDP still slipped to about 13% in 2024, well short of a 25% national target now pushed out to 2035. The flagship $23 billion incentive scheme was allowed to lapse in March 2025 having hit 37% of its production target with under 8% of its incentives actually paid out.

China itself is the closest precedent, and the report treats it as an uncomfortable one. Chinese firms captured about 3.6% of an iPhone's manufacturing cost in 2009, and 25.4% by the iPhone X in 2018, a decade of climbing done with the largest coordinated industrial policy in modern history. Measured against the best-documented state-backed supply-chain move on record, India's iPhone-assembly migration is running at about 4.6 percentage points a year, and even at that pace China keeps a majority of iPhone assembly until around 2032.

The numbers that carry it

• 44% against 25%India's and China's shares of US smartphone imports in the second quarter of 2025, reversing a 13%-against-61% split a year earlier, on Canalys figures. As of publication, July 2026.
• Roughly 71%Share of component shipments for India-assembled phones arriving from China, first quarter of 2025.
• About 20%, or closer to 6%India's domestic value addition on the export value it books: about 20% on industry estimates, closer to 6% on the Global Trade Research Initiative's stricter net count. As of publication, July 2026.
• $7.6 billionNet foreign direct investment in fiscal 2025-26 on Reserve Bank of India figures, after $0.96 billion in fiscal 2024-25 and $44 billion in fiscal 2020-21.
• About 4.6 percentage points a yearThe measured pace of India's iPhone-assembly migration, which still leaves China holding a majority of iPhone assembly until around 2032. As of publication, July 2026.

What would change our mind

India's domestic value addition breaking sustainably above 30%, or its component-import share from China falling below 55%, either of which would mean the second clock is running far faster than the historical base rate allows.

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Published July 2026. Figures are as of publication and are not updated on this page.