This text is an on-site version of the India Business Briefing newsletter. To receive it in your inbox frequently, enroll in the event you’re a premium subscriber, or upgrade your subscription here.
Good morning. It’s been every week of binary judgments. Should India buy F-35 or Su-57 fighter jets? Did the US Agency for International Development help the Bharatiya Janata party or the opposition? Does Delhi’s recent chief minister, Rekha Gupta, bring along with her a fresh energy or an absence of experience? Even the headlines sound like Indian news television’s infamous debates now.
From the national to the private. I used to be surprised to read this week that amongst tech-savvy Indians, more income means higher loan repayments. A report on how India spends by PwC and data company Perfios shows the proportion of income spent on loan servicing is largest for high-income earners.
But first, India’s cell phone exports are growing and Apple’s “Make in India” plan couldn’t have come at a greater time.
Dialling up
India’s smartphone exports have grown nearly 50 per cent in the primary 10 months of this fiscal 12 months, and the cell phone manufacturers’ industry body this week projected that total exports for the 12 months can be Rs1.8tn ($21bn), up from Rs1.3tn in 2023-24. Apple accounts for a major contribution to this. Taiwanese supplier Foxconn and India’s Tata Electronics have been manufacturing a growing range of Apple products in India. Even the iPhone 16 Pro, Apple’s costliest phone, is now made in Tamil Nadu by Foxconn.
This is important for each India and Apple. After the introduction of the federal government’s performance-linked Make in India subsidy scheme, cell phone production in India has doubled, in line with the India Cellular & Electronics Association. Phones have now surpassed diamonds because the country’s biggest export. And although only around 15 per cent of iPhones are currently made in India, this is anticipated to extend to 25 per cent by 2027, in line with JPMorgan and Bank of America analysts. Globally, the corporate shipped some 232mn iPhones in 2024.
For Apple, this pivot to India is crucial. Previously few years, the corporate’s dependence on China as a producing location and as a market have created significant challenges. Washington’s growing tensions with Beijing have forced Apple to cut back its overwhelming reliance on Chinese production facilities. And though China stays a top marketplace for its products, the corporate has been struggling to grow its business there.
Manufacturing in India helps Apple change into more competitive in selling within the Indian market too, since it may possibly offer its products at cheaper price points minus the customs and import duties. But for Apple to actually lean into India for a “China plus one” strategy, it has to do quite a bit more. The iPhones currently made in India are still largely assembled using flown-in parts. The corporate needs a supply base in India that’s as robust because the one in China, and component manufacturers may have to be incentivised to establish shop.
More importantly, Apple has to do that while attempting to figure a way out of the worldwide fatigue of sorts amongst users of its products. The corporate has not had a singularly successful cutting-edge recent product for several years. Customers are finding fewer reasons to upgrade as each generation of recent devices offers only marginal improvement over the previous one. And its biggest software upgrade lately, the much-touted integration of artificial intelligence, is restricted each in its capability and in reach.
The truth is, just a few hours before I write this, Apple released its latest offering, the iPhone 16e, a pared down, single-camera offering starting at $599, which too is being sold as an excellent vehicle for Apple Intelligence, a technology that’s yet to reach even on my fully loaded iPhone Pro in India.
Really useful stories
Trump doubles down on rift with Ukraine.
The world economy needs a frontrunner. Who will it’s?
Microsoft says it has harnessed a brand new state of matter to create the fundamental constructing blocks of a quantum machine.
OpenAI seeks recent powers to fend off hostile takeover from Elon Musk.
Who desires to be a manager? Not Gen Z.
Real men, by which we mean Hollywood stars, wear girly watches.
Borrow to purchase
What is occurring with India’s elite? They’re borrowing more and proportionately investing less compared with people on much lower earnings. High earners use as much as 46 per cent of their monthly income on loan repayments, and find yourself saving only 11 per cent. While servicing debt is a major chunk of monthly outflow across the board, its percentage share goes up at every level of income increase, starting at 34 per cent for entry-level earners. That is in line with a report published by PwC and Perfios, which examined the spending behaviour of 3mn “tech-savvy” consumers who primarily use digital financial platforms.
Mid-level professionals constitute the most important chunk of loan holders at 80 per cent. Among the many higher-income cohorts, loans will not be only linked to home purchases, but additionally help fuel lifestyle expenses corresponding to shopping and travel. At lower-income brackets, persons are borrowing to pay for necessities, but their limited access to bank loans is more likely to force them to borrow from the “unorganised” sector.
On investing, this trend is reversed. At the bottom bracket with income of around Rs20,000 a month, people invest 23 per cent of their income through mutual funds, direct share purchases etc. Investment share then drops at every level, right down to 11 per cent for mid-level professionals and high earners, in line with the report.
Of the cash that continues to be, lifestyle purchases form the most important chunk of spending at 62 per cent. This includes fashion, electronics, personal care and other products. Online gaming can also be a major outflow, constituting 13 per cent of total spend, which is surprisingly (for me) at par with how much they spend on dining out (or ordering in).
This can be a significant departure from traditional Indian attitudes towards money, where savings were prioritised and superfluous spending was looked down upon. While these attitudes have been changing since India’s economic liberalisation in 1991, up to now decade and a half, a sort of aggressive consumption has change into a part of the Indian psyche. It’s worrying that a whole lot of that is being fuelled by debt, especially since India doesn’t have a social security network or a strong pension scheme for the massive majority. Personal debt levels can be a crucial metric to observe to evaluate which way the true economy is moving.
Go figure
The Reserve Bank of India released the info for foreign direct investment in India for the primary nine months of this fiscal 12 months, and so they don’t look great.
$1.18bn
Net inflow (Apr-Dec ‘24)
$7.84bn
Net inflow (Apr-Dec ‘23)
32%
Repatriation growth Y-o-Y
Read, hear, watch
Netflix’s recent release Apple Cider Vinegar is a compelling watch. Based on a real story about an Australian influencer, who lied a couple of cancer diagnosis and amassed a big following, the six-part series is a disturbing peek into the world of different treatments and wellness culture. I rarely manage to complete a complete series in every week, but I binged my way through this one in horrified fascination (helped by the incontrovertible fact that I used to be on a few three-hour long flights).
There are a number of interesting music events, especially in Mumbai, this weekend. Yo Yo Honey Singh (remember him?) is kicking off his Millionaire India Tour on Saturday and Arijit Singh is playing at Jio World Garden on Sunday. There’s a ton of other things too happening on Sunday, but how do they matter — you’ll all be glued to the India-Pakistan cricket match anyway.
Buzzer round
The leader of which country has promised an entire bunch of money handouts, including almost $600 for each household, as a part of its pre-election budget?
Send your answer to indiabrief@ft.com and check Tuesday’s newsletter to see in the event you were the primary one to get it right.
Quick answer
On Tuesday, we asked: What’s your current stock market strategy? Here’s the way you voted.
Thanks for reading. India Business Briefing is edited today by Mure Dickie. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.
