One small step for
could be a giant leap for the Indian economy. The company recently announced that it will manufacture its flagship iPhone 14 in southern India. It’ll be the first time Apple has produced a leading-edge phone in the country close to its launch. Supporters of the ruling Bharatiya Janata Party have taken Apple’s decision as a vote of confidence in Prime Minister
Narendra Modi’s
effort to boost industrialization through higher tariffs and production-linked subsidies. But India’s state-led efforts to industrialize have stumbled before. This time may be no different.
Getting manufacturing right matters. India’s success in software-services exports—$172 billion last year—may bolster national pride and generate valuable foreign exchange. But it has thus far created relatively few jobs. Last year, India’s information-technology industry directly employed only 5.1 million people in a country of 1.4 billion. No large nation has made the journey from poverty to prosperity without robust manufacturing.
Successive governments in New Delhi have failed to come up with policies that would facilitate the movement of tens of millions of workers from subsistence farming to more-productive factory jobs. Eight years ago, Mr. Modi pledged to increase the share of India’s gross domestic product created by manufacturing from 15% to 25%. It has scarcely budged.
Optimists believe India’s moment may finally have come. The Apple news broke amid the release of rosy predictions for the country’s economy.
estimates that Apple could make a quarter of iPhones in India by 2025, up from about 5% currently.
said in a recent paper that it expects India to become the world’s third-largest economy by 2027. It predicts that the share of GDP contributed by manufacturing will increase to 21% from 15.6% by 2031, and that India’s share of global exports will double.
Global events could help. China’s missteps—heightened geopolitical confrontation with the U.S., an absurd and oppressive zero-Covid policy, and heavy-handed government interference in the economy—have set in motion a reordering of global supply chains from which India can benefit. As companies look for new manufacturing locations, India, which will overtake China as the world’s most…
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