Despite applying 25 percent tariff in the US on manufacturing iPhones in India, Apple’s total cost will be much less than devices with manufacturing in the US. US President Donald Trump has warned to impose a tariff of 25 percent on iPhones made in India.

A report by the Global Trade Research Initiative (GTRI) states that despite the 25 percent tariff in the US, the cost of manufacturing in India will be low. This report has given this information based on the current value chain of the iPhone of about $ 1,000 (about Rs 85,100). More than 12 countries contribute to this. Apple has the highest $ 450 per device in this value. The company gets a value of its brand, software and design.

The report states that an iPhone of American component manufacturers like Qualcomm and Broadcom is about $ 80, Taiwan’s chip manufacturing firms, about $ 150, South Korea’s OLED screen and memory chips are about $ 90 and Japan is a share of about $ 85. Apart from this, Germany, Malaysia and Vietnam get about $ 45 from the supply of small parts. GTRI has reported that India and China get only about $ 30 despite having a large stake in iPhone assembling. This is less than three percent of the retail price of an iPhone. This report said that despite the implementation of 25 percent tariff in the US, it will be cheaper to manufacture iPhones in India.

The major reason for this is the big difference in labor costs in India and America. Workers associated with assembling of smartphones in India get about $ 230 (about Rs 19,180), while in states such as California, the laws associated with the minimum wedge in states like California get a salary of about $ 2,900 (about $ 2,41,800). In this result, an iPhone assembling cost in India is about $ 30 (about Rs 2,500). In the US, this cost will be around $ 390 (about Rs 32,520). Apart from this in India, Apple also gets the benefit of the Central Government’s production-linked incentive (PLI) scheme on manufacturing iPhone.