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From near-zero to one-fifth of global production: iPhone’s India story in under a decade.

German Chancellor Merz arrives in India today for his first trip to Asia since taking office and he's bringing 25 CEOs with him. India and Europe are about to enter a pivotal year of their partnership. The India-EU Free Trade Agreement (FTA), initially planned to be concluded by late 2025, is now expected to be finalised and announced during the upcoming EU-India Summit at the end of January.

A cascade of visits to India starting with German Chancellor Merz, including first trade announcements, clearly indicates one thing: Europe is ready to deepen ties with India.

During his two-day visit, German Chancellor Merz will be hosted by India’s Prime Minister Modi in Ahmedabad, Gujarat, today before spending a day in “India’s Silicon Valley” Bengaluru tomorrow. Accompanied by a high-level business delegation including CEOs from Siemens and Airbus, both locations are more than just symbolic choices. Gujarat is Modi’s home state and an invitation there a sign of deep partnership. Moreover, both cities host numerous German businesses in manufacturing, engineering and technology development. Merz will visit Bosch’s large Global Capability Center in Bengaluru, amongst others.

As Merz's first visit to India and his first trip to Asia since taking office, the trip highlights India's growing role as political and economic partner for Germany and Europe. Discussions will focus on deeper collaboration in semiconductors, mobility, green energy, and defence, as well as opportunities in skilling and education.

According to Reuters, two key deals are expected to be announced during this week:

Beyond individual trade agreements, the India-EU FTA will certainly be a topic of discussion as well, and I believe Merz’ visit was strategically timed to build momentum for it to be concluded.

The diplomatic coordination is unmistakable:

The momentum has built steadily over the past year and I think 2026 will be the year India is recognised as crucial partner for Europe. Geopolitical developments and trade tensions with the US and China provide tailwinds for stronger Indo-European ties, while India’s strong economic growth and stable domestic market offer compelling economic opportunities.

The political stage is set, and business leaders should follow the clear signals and prepare for deeper collaboration with the fastest growing economy.

Sources: The Economic Times, Reuters, Hindustan Times, The Hindu

In issue 16 of India Rising, I reported that 53% of the German companies that were interviewed by KPMG and the Indo-German Chamber of Commerce at that time planned to invest in 2025 and 79% by 2030. Several large announcements over the past few weeks now confirm not only substantial investments in India, but also why local presence is essential to succeed in the market.

More than 2,000 German businesses have a presence in India, but the level of commitment to manufacture, design, or develop locally differs widely. Recent announcements from established players show a clear trend towards deeper integration:

*Editorial note: in an earlier version this was wrongfully described as a German company. BENTELER however is headquartered in Salzburg, Austria.

Notice that these aren't just manufacturing investments. As they span logistics and production capacity, as well as M&A for market access, these developments show broad-based commitment.

They demonstrate that local production and supply chain capacity are essential for competitiveness in India's domestic market. DHL's substantial investment in sustainable logistics infrastructure addresses both global and domestic sustainability requirements, while also positioning the company for India's continued economic growth. The investments also reflect rising trade expectations between India and its partners following FTA signatures, especially with Europe.

The India-EU FTA will increase access to India’s domestic market for many products, but Germany’s export-oriented business model may face challenges in India’s market. India requires tailored solutions at competitive price levels, and this requires local presence. This was also a key takeaway from Wolfgang Bergthaler’s guest article “Business Model in Transition - Why Traditional Export Strategies No Longer Work” last year.

I expect this momentum to continue even after the EU-India FTA is signed, as the agreement could help reduce the cost structure of global supply chains and strengthen “Make in India for the World” strategies.

Sources: IM Mining, The Economic Times, The Hindu

Apple is reportedly exploring chip assembly and packaging in India, the next major step in its ecosystem expansion. The move comes as India targets to become a top 4 semiconductor maker by 2032, backed by accelerating investments from international players and aggressive government support.

20% of all iPhones globally are now produced in India. Apple has grown its ecosystem in India exponentially over the past 5 years (see India Rising 35), and is now reportedly considering the next steps in its maturity curve: assembling and packaging of iPhone chips.

Some details:

This comes on top of the broader build-out of the electronics manufacturing ecosystem. Apple and Samsung have been included in India’s next phase of the electronics component manufacturing scheme, of which Apple’s ecosystem will contribute 60% of all dedicated investments and jobs to be created. These suppliers even begun exporting electronics components for all Apple products to China and Vietnam, disrupting prior supply chain flows.

Electronics and semiconductor supply chains are undergoing rapid transofrmation due to US-imposed tariffs and de-risking measures. This explains why the Dutch leader ASML recently announced an office in India’s GIFT City (see India Rising 38). European companies across sectors should recognise the opportunity created here in adjacent sectors, from sensors or high-quality gases required for the semiconductor manufacturing processes. The shift will reshape sourcing strategies in all sectors incl. automotive and others.

Sources: IndianWeb2, Times of India

Germany’s DW reported on the potential shift in focus to India by German carmakers, now that sales in China are down.

Your random facts and stories about India and the Indo-European friendship.

This week: India’s Republic Day

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