This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.

Each weekday, CNBC’s “Inside India” news show gives you news and market commentary on the emerging powerhouse businesses, and the people behind its rise. Livestream the show on YouTube and catch highlights here. 

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U.S.: Sunday-Thursday, 23:00-0000 ET
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U.S. President Donald Trump has never been the one to hold back an opinion.

“I had a little problem with Tim Cook yesterday,” Trump said on a trip to Qatar last week, referring to a conversation he had with Apple’s chief executive about the company’s decision to move iPhone manufacturing from China to India, rather than the United States.

“I don’t want you building in India,” Trump said he told Cook, after news emerged of Apple’s decision to ramp up production in India with the aim of making around 25% of global iPhones in the country in the next few years, and reduce reliance on China, where around 90% of its flagship smartphone is currently assembled.

While India has certainly emerged as a significant, albeit nascent, hub for electronics assembly, the path to it becoming a clear-cut alternative to China isn’t a guaranteed outcome, despite U.S. tariffs on Chinese goods.

Geopolitical upheavals appear to be one of the many such hurdles for India, as well as businesses eyeing the country.

For Apple, moving manufacturing to the United States, instead of India, from China still remains within the realm of possibilities, even if improbable for the company.

If Apple were to move final assembly to the United States, iPhone costs could increase by 25% due to higher U.S. labor costs, according to analysts from Bank of America. However, that assumes subcomponents, like cameras, are still partly assembled outside the U.S.

To put that into context, the base model for iPhone 16 Pro Max costs $1,199 to buy outright, with $125.90 added in local taxes in Louisiana, for instance. Final assembly and testing in the U.S. would simply add $160 to the consumer’s bill.

Meanwhile, the jobs at stake are performed by 1.4 million people employed by Apple’s suppliers overseas.

Could Trump and his backers believe that the additional costs might be worth paying if many thousands of jobs are created in the U.S.?

“If Apple does move final assembly to the U.S., it would need tariff waivers on components/sub-assemblies manufactured globally to make the manufacturing shifts viable,” BofA’s Wamsi Mohan said in a note to clients.

While technically possible, Mohan views moving the entire iPhone supply chain to the U.S. as a “much bigger undertaking” that would “likely take many years, if even possible,” and does not expect near-term manufacturing shifts to the U.S. unless tariff policies become permanent.

The core challenge for India extends beyond just attracting companies.

“Supply chain and manufacturing, these things take a long time to establish,” said Nick McConway, head of Asia ex-Japan equity at Amundi Asset Management. “We saw that with Vietnam, who had to put huge investment into infrastructure. The lights have to stay on, the roads have to be there, the trucks have to get there in time.”

“I think India is only at the very early stage of developing these types of globally facing manufacturing capacities,” McConway added.

The fund manager also highlighted that while labor costs can be low in India, it doesn’t mean savings for companies moving their manufacturing base to India.

“While your labour costs can be low, your unit labour cost is not because the productivity is no good,” McConway said.

Meanwhile, for the U.S., this productivity gap can offset the advantages of cheaper labor, making it difficult for India to compete effectively on a global scale for high-value manufacturing. Apple has also made significant progress in automating several roles in its final assembly line, reducing the number of people required by more than 50% since the process began.

And even if India wins a larger share of Apple’s iPhone assembly business, the benefits for the country are likely to be minimal, according to one analyst.

“Today, India earns just $30 per iPhone, much of which is given back to Apple as subsidy under the [Production Linked Incentive] scheme,” said Ajay Srivastava, founder of think tank Global Trade Research Initiative.

Srivastava, a former trade negotiator for India, took a protectionist approach and suggested that New Delhi’s reduction of tariffs on smartphone components at the behest of Apple could hurt domestic efforts to build a local component ecosystem.

“If Apple’s assembly moves out, India will be forced to stop propping up shallow assembly lines and instead invest in deeper manufacturing—chips, displays, batteries, and beyond.”

In the end, it might not even be Trump’s push to reshore manufacturing back to the U.S. that devoid India of foreign investment. The country might just have work harder to attract investors.

— CNBC’s Michael Bloom and Arjun Kharpal contributed reporting.

India’s market is one of the best long-term plays, analysts say. As the “sell U.S.” narrative picks up steam amid U.S. tariff turbulence and concerns over the country’s mounting fiscal deficit, emerging markets have gained traction as an attractive alternative for investors. Among emerging markets, Malcolm Dorson, head of the active investment team at Global X ETFs, believes India offers the best long–term growth play, a sentiment echoed by Mohit Mirpuri, equity fund manager at SGMC Capital, who said that theme is anchored in India’s domestic demand.

India is hoping for a full exemption from the U.S.’ “reciprocal” tariffs. The duties on the South Asian country come in at 26%, and officials are seeking to strike a deal with the U.S. to do away with the tariffs completely, according to CNBC TV18. However, India is reluctant to let goods like agriculture and dairy be imported, which is likely proving to be a roadblock in the negotiations, said former Indian Ambassador to the World Trade Organisation Jayant Dasgupta. That said, India’s large domestic economy and low dependence on imports could shield it from the impact of tariffs, according to a Moody’s Ratings report released May 21.

Britain and the U.S. are working together to preserve the India-Pakistan ceasefire. “Confidence-building measures” and dialogues are on the table, U.K. Foreign Minister David Lammy said on Saturday. India on May 6 said its armed forces had conducted strikes against Pakistan and what it calls Pakistan-occupied Jammu and Kashmir, targeting “terrorist infrastructure.” The operation follows a militant attack last month in Pahalgam, Jammu and Kashmir, in which 26 people were killed.

— Yeo Boon Ping

Indian stocks have declined over the past week by more than 1.5% so far. The Nifty 50 index has risen by 3.65% this year.

The benchmark 10-year Indian government bond yield has ticked slightly lower to 6.22%, down by 2 basis points over the past week.

On CNBC TV this week, Lavina Quadros, managing director of equities research at Jefferies India, said India’s defense sector has “come a long way” in the last ten years, since the government pushed to reduce such imports to 30% from 70%. Investor confidence in Indian defense firms has also been boosted because domestic air defense systems, for instance, have successfully intercepted foreign drones. But execution of orders remains a key concern for investors.

Meanwhile, Sanjeev Sanyal, a member of the Indian Prime Minister’s Economic Advisory Council, noted that the global supply chain will likely look different by 2030 — and India intends to play a key role in it. The country is already “a very important part of the global services supply chain,” a fact neglected by many, and will now focus on efforts in manufacturing, especially in the electronics and metals, Sanyal added. Even if the U.S. wants to reindustrialize itself, the country will still have to rely on others for materials, and that presents an opportunity for India, Sanyal said.

— Yeo Boon Ping

Borana Weaves, a fabric producer, lists on the Indian stock market Tuesday, followed by automotives part manufacturer Belrise Industries on Wednesday.

May 27: Borana Weaves IPO

May 28: Belrise Industries IPO, India industrial and manufacturing production for April

May 29: U.S. Federal Open Market Committee minutes for May meeting

— Yeo Boon Ping