Apple's escalating manufacturing activities in India, driven by the desire to diversify its supply chain and reduce reliance on China, now face a complex and potentially volatile situation due to the possibility of a detente in US-China trade relations. While Apple's commitment to India appears strong, a potential trade deal between the US and China introduces uncertainty that could impact the scale and pace of Apple's expansion in the South Asian nation.

Several factors have propelled Apple's shift towards India. Firstly, the ongoing trade tensions between the US and China, characterized by tariffs and geopolitical risks, have compelled Apple to seek alternative manufacturing locations. India, with its lower labor costs, a large pool of skilled workers, and government incentives like the Production Linked Incentive (PLI) scheme, has emerged as an attractive option. Secondly, the COVID-19 pandemic exposed the vulnerabilities of relying heavily on a single manufacturing hub, prompting Apple to build resilience into its supply chain by geographically diversifying its production base.

Apple's efforts in India have already yielded significant results. The company is working closely with its partners like Foxconn, Pegatron, and Tata Electronics to ramp up iPhone production in India. In the fiscal year ending March 2025, Apple manufactured iPhones worth approximately $22 billion in India, a 60% increase compared to the previous year. Furthermore, India now accounts for about 18% of global iPhone production, with Apple aiming to manufacture most of the iPhones sold in the US from India by the end of 2026. To support this expansion, Foxconn, a major Apple supplier, is investing $1.5 billion in its India unit to build new plants and increase production capacity. Tata Group is also playing a crucial role, with its electronics manufacturing arm acquiring Wistron's local business and running Pegatron's operations in India.

However, the recent easing of trade tensions between the US and China introduces a new dynamic. The United States and China recently reached a 90-day tariff truce, aimed at de-escalating a long-standing trade dispute. This development prompted speculation about its impact on Apple's strategy and India's growing role in global electronics manufacturing. While the full details and long-term implications of any potential trade deal remain unclear, some analysts express concern that a "trade reset" between the US and China could potentially slow down or even reverse the flow of manufacturing investments into India.

Despite these concerns, there are also arguments suggesting that Apple's India strategy remains robust. Even if the US decides to withdraw the fentanyl-related levy after the 90-day window, India's growing manufacturing base and policy support may continue to make it a viable alternative to China. Apple's strategy clarified that the company's production shift away from China was conceived well before the current tariff battles. The tariff regime may have reinforced the urgency, but the decision is driven by the broader need to diversify supply chains and reduce dependency on a single country. Apple reportedly aims to move a quarter of its iPhone production capacity to India by FY26. This aligns with India's broader push to become a global manufacturing hub through programmes such as the Production Linked Incentive (PLI) scheme.

Ultimately, the impact of a US-China trade deal on Apple's India manufacturing surge will depend on several factors, including the specific terms of the agreement, the long-term trajectory of US-China relations, and India's ability to further enhance its manufacturing ecosystem. India needs to address its reliance on China for raw materials and components to increase its value capture in the iPhone manufacturing process. The country must also continue to improve its infrastructure, streamline regulations, and foster a skilled workforce to remain competitive.

In conclusion, while the possibility of a US-China trade deal introduces an element of uncertainty, Apple's commitment to India appears strong, driven by long-term strategic considerations beyond immediate trade tensions. However, India must remain vigilant and proactive in addressing its manufacturing challenges to fully capitalize on the opportunities presented by Apple's diversification strategy.