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Business Impact

An Apple Manufacturing Plant in India? Don’t Tell Trump

The president-elect might want to bring manufacturing home to America, but Apple seems to have other ideas.

While Donald Trump is urging the American technology industry to shift manufacturing efforts to U.S. shores, it appears Apple didn’t get the memo: it’s apparently considering setting up a production plant in India.

The Wall Street Journal reports that Apple is in discussions with the Indian government about building products in the country. According to the newspaper’s sources, the company has stated its desire to manufacture there, but is seeking “financial incentives to move ahead.”

The plan makes sense. Apple doesn’t have much in the way of market penetration in India, partly because it doesn’t have its own stores there. But regulations in the country prevent foreign companies from setting up shop unless they purchase 30 percent of materials for manufacturing domestically. India isn’t geared up for delivering iPhone parts, so setting up a plant would solve the problem.

A modest facility—likely, as it would surely be more an assembly facility rather than anything else—would help Apple grow in India as it has in China, then. But the U.S. economy would see little benefit beyond Apple's stock price given its history of squirrelling money away off-shore rather than bringing it back to America and paying tax.

Even if Apple’s Indian manufacturing outfit were small, though, the president-elect would not be pleased. Trump has repeatedly called for U.S. technology companies to manufacture products on American soil. And he’s singled Apple out, saying that he will get it “to start making their computers and their iPhones on our land, not in China.” 

For its part, Apple cites not just cheaper labor but skilled workforces and flexible factories as key motivations for manufacturing overseas. And at any rate, if Apple did move its iPhone production to the U.S., the resulting iPhones would have to be more expensive.

U.S. tech employment did get a boost earlier this month, when Japanese telecom company Softbank committed to investing $50 billion in America, with plans to create 50,000 new jobs. That’s already starting to bubble through: the first investment on the list is $1 billion for Internet satellite firm OneWeb, which will create 3,000 jobs. Trump claimed credit for the SoftBank investment, though the money comes from a fund that was already being set up in collaboration with the government of Saudi Arabia—and may well have been destined for U.S. shores regardless.

Apple, meanwhile, is likely to tread its own path. In a leaked memo sent by Tim Cook to his staff, the CEO justified his presence at Trump’s tech roundtable last week. “It’s very important [to engage],” he explained. “Governments can affect our ability to do what we do. They can affect it in positive ways and they can affect in not so positive ways … And we engage when we agree and we engage when we disagree … We very much stand up for what we believe in … And we’ll continue to do so.”

Those are not the words of a CEO who plans to be bossed around by anyone if they can at all avoid it. Not even by a president.

(Read more: Wall Street Journal, TechCrunch, Reuters, “The All-American iPhone,” “Made in America: Asian Tech Giants Say They Will Expand U.S. Operations Under Trump,” "Apple’s Tax Game Is Hurting Economic Growth")

Hear more about manufacturing at EmTech MIT 2017.

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