@phreakv6 very good summuary. Trying to write something- credits to Suyash Bhave.
Suzuki and Apple – Does History Rhyme?
At first glance, drawing parallels between an auto company of the 1980s and a modern-day technology giant might seem odd.
Suzuki’s entry into India:
- In the early 1980s, the Indian auto market was a closed, monopolistic space with just Ambassador and Premier Padmini dominating. Financial and operational efficiency metrics — working capital cycles, margins, return ratios — were hardly in focus.
- After Sanjay Gandhi’s failed attempt to create a viable car company, the Indira Gandhi government facilitated a JV between Maruti Udyog Ltd and Suzuki of Japan in 1982. Interestingly, Suzuki itself was still a relatively minor player in Japan back then.
- What Suzuki brought in was not just cars, but processes: Total Quality Management (TQM), Just-in-Time (JIT), and Kaizen. These methods revolutionized efficiency, discipline, and quality — permanently reshaping the Indian auto industry.
Completely Knocked Down (CKD) / Semi Knocked Down (SKD) to 95% Indigenization:
When Maruti Suzuki began operations in 1983, local value addition was barely ~3%. By 1991 it had risen to ~65%, and today ~95% of the car is indigenized. This gradual transformation shows how a nascent industry, initially dependent on imports, can build deep local capabilities over time. A similar trajectory could play out for India’s EMS/contract manufacturing sector, where value addition is still limited today.
Government Push – Then and Now
In the 1980s, the government rolled out the Phased Manufacturing Programme (PMP). While it didn’t offer subsidies like today’s PLI scheme, PMP created a framework for rapid indigenization:
- Imports were allowed in the early phase, but with strict, time-bound local sourcing targets.
- Penalties existed for missing indigenization milestones.
- Forex regulations were eased, and access to the domestic market was provided as an incentive.
Suzuki’s Handholding
Suzuki didn’t just sell cars; it built an ecosystem:
- Long-term purchase agreements gave revenue visibility to local vendors.
- Japanese suppliers were encouraged to enter India through JVs with local players.
- Suzuki engineers trained Indian engineers, raising process and quality standards.
- Japanese banks were nudged to provide financing, while Indian DFIs like ICICI and IDBI, along with IFC, were mobilized to fund ancillary growth.
The Keiretsu Model in Action:
Maruti Suzuki’s success wasn’t just about assembling cars — it was about building an entire supply chain ecosystem. The Keiretsu model — a network of interlinked companies — was pivotal to this. Leading Japanese auto suppliers followed Suzuki’s lead and entered the Indian market:
- Denso (alternators and starter motors)
- Sumitomo and Motherson Sumi (wiring harnesses)
- Asahi Glass, Krishna Maruti (seats)
- Sono Koyo Steering, Kansai Nerolac
- Machino Plastics, Jay Bharat Maruti
- Nippon Thermostat (India), Lumax
This ecosystem-building approach led to a transformational shift in India’s automotive landscape. It opened the door to Indo-Japanese collaboration, which later expanded to broader Indo-Asian partnerships. Over time, other major collaborations followed suit, including:
- Hero Honda, Kinetic Honda, Ind Suzuki (TVS)
- Bajaj Kawasaki, Mahindra Renault
- Jindal MG, and many more.
This model, initiated by Maruti Suzuki, redefined India’s auto industry, fostering deep collaboration between Indian and global players, which continues to shape the market today.
Parallels Between Suzuki’s Auto Journey and India’s EMS Opportunity:
- Lack of Existing Domestic Ecosystem:
In the 1980s, Indian auto component manufacturers, like those supplying parts for the Premier Padmini, were operating with outdated systems and technologies. Today, India’s smartphone manufacturing and assembly capabilities are still in their nascent stages — a sector that has only begun to scale up post-2020. The lack of a deep domestic ecosystem mirrors the auto industry’s early days. - PMP-PLI Similarities:
- Low Value Addition Initially:
Both industries began with minimal local value addition. Maruti’s early days saw very little indigenization, and similarly, India’s smartphone sector started with very limited local value added. However, both industries have the potential to scale this over time. - Efforts to Develop the Ecosystem:
Just as Maruti Suzuki worked to develop an entire supply chain ecosystem — with Japanese suppliers setting up operations in India — the EMS sector in India has a long road ahead in terms of building out a deep supplier base (Imo most important thing). The government’s incentives will also play a huge part.
Divergence – Suzuki vs Apple:
- Company Size & Market Impact:
In the 1980s, Suzuki was a small player, with only 1–1.5% of the global passenger vehicle market share, primarily known for two-wheelers. Apple, on the other hand, is a global giant today, commanding 20% of global volume and 80% of global profit. - Vendor Hesitation & Established Demand:
Initially, there was hesitation from auto vendors to partner with Suzuki. Many were unsure about the number of orders Maruti would receive, with an expected 40,000 orders — but Suzuki exceeded expectations with 1.25 lakh orders. In contrast, Apple’s demand in India is already well-established, with no such vendor reluctance. - Local vs Global Story:
The Maruti Suzuki JV was primarily an India-focused story, with Suzuki trying to build a presence in India, which was a nascent market. On the other hand, Apple’s presence in India is a global story. - Political Support – Then vs Now:
The Maruti Suzuki JV had strong domestic support, with no major international opposition, while Apple’s India operations face active resistance from both China (due to supply chain shifts) and the US (due to strategic, geopolitical concerns, make in US move). Unlike in Suzuki’s time, Apple faces a much more complex and contested environment. - Focus of Government Schemes:
The PMP in the 1980s was mainly inward-looking, aimed at domestic consumption, whereas the current PLI scheme is outward-looking, encouraging exports and helping India become a global manufacturing hub. - Strategic Vision – Now vs Then:
As against the PMO family’s pet project (Maruti Udyog Ltd – Mr. Sanjay Gandhi), today, it’s a well thought out plan (Make-in-India, China+1, Aatmanirbhar Bharat, etc). - Competitive vs Monopolistic Landscape:
Today’s landscape is more competitive, with room for multiple players, not just one. - Critical Stakes for Both Parties:
For Apple, reducing dependence on China and securing supply chains is critical. For India, fostering indigenization, creating jobs, and scaling manufacturing are vital. In contrast, back in the day, Suzuki’s success didn’t hinge on such urgent, multifaceted factors.
The Success of PLI in Mobile Manufacturing: A Transformation from FY15 to FY25
FY15:
- Domestic Mobile Phone Production: Approximately 6 crores units.
- Import Dependence: Around 74% of phones sold in India were imported.
- Exports: Total export value stood at ~₹1,500 Crores.
Fast Forward to FY25:
- Domestic Production Dominance: Over 99% of the phones sold in India are now manufactured locally.
- Exports: massive leap to ₹2 Lakh Crores in total exports. Key Exporters Companies like Foxconn, Tata Electronics, and Pegatron have significantly contributed to this growth.
- Value Addition: The industry now adds 18-20% value to the mobile manufacturing process.
Approved PLI Companies for mobile phones & specified electronic components:
Value Addition in Mobile Manufacturing:
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China’s Early Struggles & Evolution:
Initially, China’s value addition to mobile phones was under 4%, a point that was even mocked in a Wall Street Journal article. However, as Apple consolidated its manufacturing base in China to avoid managing multiple jurisdictions, the value added grew significantly, particularly in areas like displays, camera modules, PCBs, and enclosures. By now, Chinese value addition is estimated at around 50-55%, with 45% of the Bill of Materials (BOM) for an iPhone coming from semiconductor chips sourced from Taiwan. -
India’s Progress & Government Support:
In March 2025, the Government of India launched the Electronic Component Manufacturing Scheme (ECMS), with a substantial budget of ₹23,000 Crores, focusing on the non-semiconductor BOM (including components like displays, batteries, etc.). The scheme comes with flexible incentives (not just linked to turnover/production) to incentivize deeper value creation. Additionally, a separate policy for semiconductors is being developed to boost India’s role in the semiconductor value chain. -
India’s Design Capability:
A key advantage India holds is its design prowess. For instance, the Google Pixel’s Tensor chip design team is based in Bangalore, underlining India’s capability in chip design. While China still leads in the manufacturing side, India is closing the gap on design, with India’s share around 20%, compared to China’s 25-30%. This brings India much closer to China in terms of design capability, an area where India has significant growth potential.
China Can Only Slow India Down – Not Stop It:
India has historically overcome strong foreign interference in its bid to keep
acquiring / indigenizing critical technology. E.g., despite setbacks in core national
security and strategic programs like nuclear power & weapons (Homi Bhabha
mysterious place crash), and space technology (multiple ISRO scientists dying under mysterious circumstances), India has still managed to develop a robust nuclear arsenal and is today a global cost leader in satellite launch technology.
Geopolitical Pressures Accelerating India’s Growth:
It could be argued that President Xi Jinping’s aggressive actions (against Apple, India, or the US by restricting exports of critical materials and equipment in response to tariffs) (China targets India's manufacturing sector, delays machinery delivery, pulls iPhone engineers - Times of India) and President Trump’s erratic tariff policies (which threatened global supply chain stability) have actually pushed Indian policymakers to improve the ease of doing business and commercial environment in India. These external pressures have accelerated Apple’s shift towards India. Apple resists Trump’s warning, says no pause on India's iPhone expansion - The Economic Times
Timing of Diwali – An Unusual Challenge:
An unusual challenge that might arise is the timing of Diwali. In China, the major production season typically starts in H2 (second half) of the year and runs until January to support the Western festival shopping seasons like Black Friday and Christmas. This is followed by the Chinese New Year holiday from January to March.
In contrast, India’s festive season, which includes several holidays, primarily falls in the peak H2 production period.