| I’m Chris Anstey, an economics editor in Boston. Today we’re looking at India’s rising place in supply chains. Send us feedback and tips to ecodaily@bloomberg.net. And if you aren’t yet signed up to receive this newsletter, you can do so here. One 2022 study of Apple’s reliance on China in its global supply chain estimated that shifting just 10% of its production capacity out of the country — where roughly 98% of its iPhones were made — would take eight years. Given China’s expertise in smartphone manufacturing, and an extensive supply chain built over two decades, it was perfectly logical to think it would take enormous effort and time to shift away. And yet, in the 12 months to March, the Cupertino, California-based company assembled $22 billion worth of iPhones in India, ramping up production by nearly 60%, Bloomberg reported earlier this month. In that period, Apple made not just 10%, but some 20% of its iPhones in the south Asian country. Apple is now seeking to import most of the iPhones it sells in the US from India by the end of next year — which would roughly mean a further doubling of annual Indian output — Bloomberg reported last week.  Customers queue outside the Apple Inc. BKC store in Mumbai Sept. 20, 2024 Photographer: Dhiraj Singh/Bloomberg India’s challenges with regard to permits, logistics and skilled-labor shortages once appeared formidable. And then there was Beijing’s wariness about companies trying to diversify away. Steven Tseng, Bloomberg Industries analyst, highlights that for now India is more of an assembly hub. “Most components are still sourced overseas, mainly from China,” he said. “Building a local component supply chain will be critical for Apple to truly reduce its reliance on China, but the transition will takes years or even decades.” Earlier this year, Bloomberg reported that Foxconn Technology, Apple’s main assembly partner, hadn’t been able to dispatch Chinese staff to India, and its factory hadn’t been able to receive additional specialized machinery from China. Ironically, New Delhi now stands to reap some dividends after having failed to implement the export-led, rapid industrial growth model pioneered by Japan after World War II that was later taken up by South Korea, Taiwan and eventually China. India had a goods-trade surplus of a little over $47 billion with the US last year, less than 4% of the total American deficit. It also lacks the sort of exchange-rate policy, subsidy structure and non-tariff barrier protections that many east Asian export powerhouses erected — something that’s helped put it in pole position for an early agreement with the Trump administration. Without that panoply of concerns, “in a funny way, negotiating with the Indians” is facilitated by the fact that the main issue is high tariffs, Treasury Secretary Scott Bessent told reporters in an April 23 roundtable. It’s “much easier” to simply negotiate down duty levels, he said. He also said a deal is now “very close,” after Vice President JD Vance’s India visit. Even Chinese companies are taking note of the opportunity. With most Chinese exports to the US hit with levies of 145%, some China-based firms are reaching out to Indian exporters to fill orders on their behalf and help them retain their American customers, Bloomberg reported Monday. At the Canton Fair that runs through May 5, several Indian firms were approached by Chinese companies to supply goods to their US customers, hoping to retain their American customers. Those new relationships will be bound to shape trade and investment flows for years to come. The Best of Bloomberg Economics | - European Central Bank officials are preparing to lower interest rates further, expecting lasting damage to the economy from US tariffs.
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After cruising along comfortably for most of last year, the world’s largest economy lost altitude at the start of 2025 as consumers tired and the trade deficit ballooned on a tariff-related scramble for imports. On Wednesday, the US government’s initial estimate of first-quarter gross domestic product is projected to show the economy expanded at a 0.4% annualized rate, the weakest in nearly three years. Near-stagnant GDP would risk elevating concerns about a potential recession and any unraveling of the job market. Elsewhere, Chinese purchasing manager indexes, economic output and inflation data across Europe, and Monday’s election in Canada will be in focus. Central banks in Japan, Hungary, Chile and Colombia are expected to leave rates unchanged, while Thai policymakers may cut. See here for the rest of the week’s economic events. Artificial intelligence will transform how central banks use their employees, according to the Bank for International Settlements. The Basel-based institution released a study this month that tries to imagine how monetary authorities will adjust work practices to increasingly rely on the technology for tasks such as economic forecasting and financial stability monitoring. In one scenario envisaged by BIS researchers Sarah Bell, Blaise Gadanecz, Leonardo Gambacorta, Fernando Perez-Cruz and Vatsala Shreeti, AI will complement rather than replace efforts by humans. Another scenario looks at how the technology could even substitute them. Either way, developing the skills to harness the potential of AI is going to be a challenge. The study cited a survey of central banks where almost 90% of them reported difficulties in recruiting staff with requisite knowledge for roles such as those involved in technology in the past five years. | 
