Here’s how much countries gain from putting together iPhone 7 and iPod ⁠— Economic Survey’s case for ‘Assemble in India’

• The Chief Economic Advisor believes that India’s can reap considerable benefits from participating in global value chains.
• He points to China’s example of only assembling the iPhone 7 and the iPod, instead of producing it from scratch.
• The Survey postulates that global value chains can result in job and value creation for India’s economy.

India’s Chief Economic Advisor (CEA) feels India needs to increase its participation in global value chains, like the production of Apple’s iPhone 7 and the iPod.

According to the Indian Economic Survey, the foreign value that is added to exports is normally higher than if the inputs were sourced locally. However, because the scale of operations is so large, participation in global value chains can trigger a multiplier effect. An effect that results in more value and more jobs.

“The scale effect creates millions of jobs and is therefore particularly suited for implementation in a labour-intensive economy such as India,” said the Survey.

Following the example set by China

It argues that India has massive potential to become a hub for final assembly of "network products". These global value chains are largely controlled by global tech giants like Apple, Samsung and Sony among others. Most of the products produced by these companies aren't produced in only one country. Instead, production is distributed to different countries around the world with specialisation in select parts of the process.

China, for instance, has a comparative advantage when it comes to assembly which it has capitalised on by being a part of the Apple iPod value chain. Even though it only made $4 off every iPod, which retailed for $144 in 2008 — the aggregate domestic value addition was $219 million. This is because, overall, 54.83 million iPods were sold globally.


The same can be applied to the iPhone 7. One unit only yields $8.46 for the economy. That being said, the iPhone 7 was among the best-selling smartphones worldwide in 2017 hitting 21.5 million units. That’s an estimated yield of $181.89 million for China in one year from a single value chain for only one product.


Last year in April, Apple announced that it would now be assembling the iPhone 7 in India through its manufacturing partner, Wistron. Despite the phone’s popularity, the model is now more than three years old. The only reason for people to still buy it is that it’s still one-third the price of an iPhone 8.


“The bottom line is that India can reap rich dividends by adopting policies aimed at strengthening its participation in global value chains,” said the Survey. Yet, even by 2018, India’s world market share remains paltry compared to 12.8% for China.


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