CNBC’s Inside India e-newsletter: From Shein to iPhones: India’s production second is right here

This file is from this week’s CNBC’s “Inside India” e-newsletter which brings you well timed, insightful information and marketplace remark at the rising powerhouse and the large companies at the back of its meteoric upward thrust. Like what you spot? You can subscribe right here.

Each weekday, CNBC’s “Inside India” information display provides you with information and marketplace remark at the rising powerhouse companies, and the folks at the back of its upward thrust. Livestream the display on YouTube and catch highlights right here. 

SHOWTIMES:

U.S.: Sunday-Thursday, 23:00-0000 ET
Asia: Monday-Friday, 11:00-12:00 SIN/HK, 08:30-09:30 India 
Europe: Monday-Friday, 0500-06:00 CET

Take Apple. Just closing month, Foxconn dedicated $1.5 billion to make bigger its iPhone facility in Tamil Nadu. That’s a hefty sign of self assurance. Right now, about 18% of all iPhones are made in India — a bunch that used to be within the low unmarried digits only a few years in the past. According to analysts, that would upward thrust to 25% by means of 2027. In phrases of exports, India shipped $24.14 billion value of smartphones in 2024-25, marking a 55% build up from the former yr.

Google is making an identical strikes. The corporate has introduced it’s going to get started assembling Pixel smartphones in India, partnering with Dixon Technologies. The hope is to double {hardware} income within the area — and get nearer to one of the most fastest-growing smartphone markets on this planet.

But the fad does not forestall with client tech.

Vietnamese electrical car maker VinFast is development a $2 billion plant in Tamil Nadu. The purpose? To flip India into an export hub for its vehicles. Aerospace giants like Airbus and Pratt & Whitney also are sourcing extra elements from Indian providers. According to knowledge from India’s Ministry of Commerce, aerospace exports rose 38% year-on-year in 2023-2024.

So no — this is not with reference to Shein. It’s a few broader realignment throughout sectors, pushed by means of a mixture of geopolitics, economics, and technique.

Here’s the backdrop: the U.S.-China business courting stays aggravating. Tariffs have endured via a couple of administrations. Add to that rising scrutiny over knowledge privateness, nationwide safety, and tech transfers — and you have got a posh equation that world companies are an increasing number of taking a look to unravel.

The solution for some is to unfold their bets.

That’s the place India enters the body: no longer essentially because the alternative for China, however instead. With its huge, younger exertions drive, and a central authority that is providing production incentives just like the Production-Linked Incentive (PLI) scheme, India is pitching itself as an interesting selection for firms taking a look to diversify.

The PLI scheme by myself, introduced in 2020, covers greater than a dozen sectors, together with electronics, prescribed drugs, sun modules, and textiles. According to executive figures, over $33 billion in dedicated funding has been tracked below the initiative thus far.

But let’s no longer get too over excited.

Because even with momentum on its facet, India’s trail is not with out hurdles.

“India is not without risk in this respect,” Susannah Streeter, head of cash and markets at Hargreaves Lansdown, advised CNBC’s Karen Gilchrist this week. “There have been reports of labor violations amounting to forced and child labor occurring on cotton farms supplying to three Indian textile suppliers to 60 multinational clothing brands.”

These considerations are not remoted. For all of its commercial push, India nonetheless grapples with logistical bottlenecks, regulatory purple tape, and patchy infrastructure in lots of areas. The World Bank’s Logistics Performance Index positioned India 38th in 2023; higher than it used to be, however nonetheless at the back of a number of Southeast Asian friends like Malaysia and Thailand.

And but, for lots of corporations, it is now not about opting for the most productive delivery chain — it is about development a resilient one.

That’s very true in an international the place pandemics, port disruptions, and political tensions can upend manufacturing in a single day. India, with its scale and democratic setup, items a quite strong choice in an an increasing number of risky global.

Still, it isn’t a positive guess.

A 2023 file by means of Nomura confirmed that whilst India had won some marketplace proportion in world exports — particularly in electronics and equipment — nations like Vietnam, Mexico, or even Bangladesh had additionally benefitted from the “China + 1” technique. In a next file, in 2025, Nomura reaffirmed that India is poised to be one of the most largest winners within the subsequent spherical of supply-chain reallocation.

So the tale is not “India wins, China loses.” It’s extra nuanced than that.

What we are seeing is a rebalancing. A diversification of bets. A global the place corporations are not simply chasing low prices — they are on the lookout for political alignment, incentives, and possibility mitigation.

That makes India considered one of a number of key gamers on this production reshuffle.

For buyers, this items each alternatives and caveats. The upside? An enormous home marketplace, emerging exports, and a gentle circulate of international funding. The problem? Execution dangers, governance problems, and rising pains that cannot be unnoticed.

Ultimately, India’s upward thrust within the production narrative is not only about what it is doing proper, it is usually about how world dynamics are converting.

And that is what makes the Shein tale extra than simply instant trend.

It’s an indication of ways corporations are considering — globally, cautiously, and with an eye fixed at the lengthy sport.

What do you suppose?

— Spriha Srivastava 

Air India Boeing 787 sure for London with 242 aboard crashes after takeoff in India. Boeing Dreamliner aircraft with 242 other folks aboard crashed moments after takeoff from Ahmedabad in western India, native officers and the service stated Thursday. Air India Flight 171 used to be flying out of Ahmedabad sure for London Gatwick Airport when it used to be “involved in a tragic accident today,” Air India Chairman N Chandrasekaran stated.

India’s headline inflation eases to cooler-than-expected 2.82% in May. India’s client inflation eased to 2.82% in May, the rustic’s Ministry of Statistics and Programme Implementation reported Thursday. Food inflation, a key metric, hit 0.99% in May, sharply underneath the 1.78% of April. Vegetable inflation dipped by means of 13.7% in April, with cereal worth expansion up by means of 4.77% in May.

India cuts rates of interest by means of 0.5 share level. The Reserve Bank of India on Friday reduced its benchmark coverage charge for the 3rd consecutive time to 5.5% from 6%, the bottom degree since August 2022. Economists polled by means of Reuters had anticipated the central financial institution to scale back charges by means of 0.25 share level. RBI Governor Sanjay Malhotra stated that the financial institution delivered an oversized minimize as a result of expansion has been “lower than our aspirations amidst a challenging global environment and heightened uncertainty.”

India and the U.S. held business talks closing week. Government officers mentioned the India-U.S. Bilateral Trade Agreement with Assistant U.S. Trade Representative Brendon Lynch, assets advised CNBC-TV18. The talks, which happened between June 4 and June 10 in New Delhi, have been “constructive,” the assets stated. External Affairs Minister Subrahmanyam Jaishankar stated Tuesday he used to be hopeful a deal may well be reached sooner than “reciprocal” price lists resume on July 9.

Shein to transport production to India. In mild of the continuing U.S.-China business conflict, Shein is making plans to extend its Indian providers to 1,000 from 150 inside a yr, Reuters reported Monday, bringing up assets. The Chinese instant trend large just lately partnered with Reliance Industries to carry its logo to India in February, after being banned from the rustic in 2020.

— Yeo Boon Ping

The benchmark Nifty 50 fell 0.32% whilst the BSE Sensex had inched down 0.17% as of 10.50 a.m. Indian Standard Time.

Since the beginning of the yr, the 50-stock benchmark has risen over 6%, whilst the BSE Sensex has won 5.39%.

The benchmark 10-year Indian executive bond yield used to be marginally decrease at 6.284%.

— Amala Balakrisher

On CNBC TV this week, Pranjul Bhandari, leader India economist at HSBC, stated that when inflation is below keep an eye on, the Reserve Bank of India will likely be “fully focused on growth.” Bhandari famous that this new purpose, which used to be discussed explicitly by means of the RBI governor, displays a “new RBI” with new priorities. The central financial institution’s minimize to the money reserve ratio additionally alerts a want to spice up expansion on a structural, no longer simply cyclical, degree.

While get admission to to India’s marketplace for agricultural items is essential for the U.S. in its business talks with New Delhi, Washington must take a broader manner in its negotiations with the South Asian country, consistent with Montek Singh Ahluwalia, a best Indian economist and previous deputy chairman of the Planning Commission in India. That’s as a result of India’s “real leverage” is its large products and services and tech marketplace — using ChatGPT, as an example, is “much greater” in India than in lots of different nations, Ahluwalia stated.

— Yeo Boon Ping