What a Smartphone Tells Us About China Plus One

Empirical Proof: The Rs 1 Lakh Crore Export Run Rate

Supply-chain diversification is often discussed in general terms. The smartphone is one product where it can be measured.

A report published in September 2025 by India Sea Trade News, citing industry estimates, said India's smartphone exports in the first five months of FY26 exceeded Rs 1 lakh crore, up 55% from Rs 64,500 crore in the same period of FY25. The article does not state the months, but a five-month period in FY26 would most likely be April to August 2025.

The figures are industry estimates, so we treat them as indicative. They are from late 2025, and readers should check for later data before quoting them.

Concentration in Action: Two Vendors, One Anchor, One Destination

The same report, citing The Economic Times, said Tata Electronics and Foxconn, contract manufacturers for Apple, accounted for nearly three-quarters of outbound shipments, over Rs 75,000 crore.

It also said that in the first half of 2025, 78% of iPhones assembled in India were shipped to the United States, up from 53% the previous year. The report gave India a 44% share of the US smartphone import market, with China's share falling to 25% from 61% in mid-2024, though it did not name a source for those two figures.

The government figure it quoted was that 99.2% of mobile phones sold in India are now made domestically, up from 26% in FY14, and that India has 300 mobile production units compared with two in 2014.

“Diversification is real when the second country can stand without the first.”

Production Shift vs Risk Diversification: Our Strategic Reading

Read together, these numbers describe a real shift and a narrow base. The shift is that a product assembled almost entirely in one country now has a second large production base.

The narrow base is that most of the export growth rests on a handful of manufacturers, one brand and one destination market. A company copying this model should ask which half of the lesson applies to it.

Four Strategic Mandates for Industrial Manufacturers

1. Diversifying production is not the same as diversifying risk. If 78% of output goes to one country, a change in that country's tariffs or demand affects the whole business. India's trade arrangements with the United States, which we cover in a separate piece, show how quickly the terms can change.

2. Anchor customers build ecosystems, but they also hold the power. A large global brand can bring suppliers, standards and training. It can also move volumes elsewhere if costs change.

3. Local content takes time. Assembly is the first step. Real depth comes from components, tooling and materials, and these are where smaller Indian firms can enter.

4. Policy support is a tailwind, not a plan. Incentives under the PLI scheme helped electronics scale, as the data in our PLI piece shows, but the long-term question is competitiveness.

Supply Chain Vendor Playbook: Becoming Audit-Ready

If you supply components, packaging, testing or logistics to electronics assemblers, the main point is to be audit-ready. Large buyers ask for quality systems, traceability, delivery performance and financial stability.

Firms that can show these will find the doors open as production grows near Chennai, Bengaluru and Noida.

What to watch: The next datapoints are full-year FY26 export figures and any change in the share of shipments going to the United States. A broadening of destinations, or an increase in locally made components, would be a better sign of depth than raw export value.

Moving Beyond Assembly: The Next Industrial Frontier

A short test before you copy the model: Ask four things before deciding that a China-plus-one move suits your business. Is there a buyer who has asked for it, or are you guessing? Can you reach the required quality and delivery record within the buyer's timeline? Do you have the capital to build before orders arrive? And what happens to the plan if the buyer changes its mind? Companies that answer these honestly tend to move more slowly at the start and with fewer surprises later.

It is also worth remembering that assembly sits at the lower-value end of an electronics chain. The larger prizes, in components, materials and design, take longer and need patient capital, but they are where a country gains lasting depth. Whether India reaches them is a question for the next decade, not the next quarter.

Editorial analysis. Figures as reported by the named outlet; some were unsourced in the original and are flagged as such.