New Delhi: India is soon expected to emerge as a major manufacturing hub for iPhone as Apple is looking to diversifying production units outside China. Currently, about 5 per cent of iPhones are manufactured in India, which according to industry executives will increase to more than a fifth of total output in value over the next three to four years.
A report by The Economic Times quoted industry executives and analysts saying that the manufacturing of iPhones is set to increase sharply, driven by the recently announced India government’s Rs 41,000-crore production linked incentive (PLI) scheme.
There are currently three contract manufacturer’s for the Cupertino-based company. They are Foxconn, Pegatron and Wistron. The production in India would aid to enhance production and thereby exports of gadgets.
Notably, India has been making multiple exemptions for Apple in its manufacturing policies and all the three major contractors of Apple have successfully applied for incentives under India’s PLI scheme.
Reports earlier this year stated that the Indian government may allow some of Apple’s Chinese vendors to set up manufacturing plants on a case-by-case basis in India.
It is also being said that due to the geopolitical tensions between China and the US, Apple has been steadily working towards moving most of iPhone manufacturing to India.
Also, due to stringent COVID lockdowns in China that affected production at Foxconn facilities in China, which is largest manufacturing unit for iPhones in the world, has also accelerated Apple’s plan to make a shift out of the country.
Noted Apple analyst Ming-Chi Kuo, last month, in a tweet said Foxconn would accelerate the expansion of capacity at its India plant.
“As a result, iPhones made by Foxconn in India will grow by at least 150 per cent on-year in 2023, and the medium/long-term goal is to ship 40-45 per cent of iPhones from India (versus the current 2-4 per cent),” Kuo said.
A report by JP Morgan in September said that Apple plans to shift 25 per cent of its iPhone production to India by 2025 in a bid to diversify its manufacturing base which is currently dependent heavily on China.
“Our ability to attract global value chains (GVCs) in electronics manufacturing is more a factor of our policies like PLI than just favourable geopolitics. Competitiveness including on tariffs, preparedness to build large-scale factories and accompanying labour reforms and ensuring investment sentiment remains high at all times are key to our success,” India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo said.
“It’s a long haul,” he added. Apple is a member of ICEA,” Mohindroo added.
PLI scheme
The Indian government launched PLI scheme for smartphones in 2020. It came around a time when US-China tensions were at its peak and several companies including Apple were looking for an alternative to China. It was then the three big Apple contract manufacturers successfully applied for incentives under this scheme.
As per the guidelines of the scheme, global companies are required to make a cumulative minimum investment of Rs 1,000 crore over four years and are not required to make an investment in the last year.
Mere 10 days of global launch, Foxconn’s factory in Tamil Nadu started manufacturing iPhone 14. Also, Pegatron is making the latest device in its production unit in Tamil Nadu.
In India, Apple is currently manufacturing iPhone SE, iPhone 12, iPhone 13 and iPhone 14 (basic) models. All the Pro models which are sold in the country are imported.
iPad production to move in India
Apple reportedly is looking to move the production of some iPads to India to keep its supply chain healthy amid Covid-related disruptions at its manufacturing unit in China.
A report by CNBC quoted sources saying that Apple has “talked to Indian officials about locating some iPad manufacturing in the country as US-China relations sour and China’s Covid crackdowns snarl supply chains.”
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