Heightening Apple Inc’s focus on the world’s fastest-growing major smartphone market as growth slows elsewhere, the U.S. company will begin assembling iPhones in India by the end of April, a regional minister says.
Priyank Kharge, Karnataka’s information technology minister said that the U.S. company has tapped Taiwan’s Wistron Corp. to put together its phones in the tech capital of Bangalore in the state of Karnataka. He said in an interview that the timeline was confirmed after Apple executives met with him in January.
The Indian market is led by rival Samsung Electronics Co. and the start of iPhone assembly in India comes after months of speculation on Apple’s plan for the market.
As growth begins to slow in China and other more mature markets, it signals a renewed focus on the country, where it just scrapes into the top 10. Including a 15-year tax holiday to import components and equipment in negotiations with India’s federal government, the Cupertino, California-based company is said to have put forward a long list of demands.
“Apple’s iPhones will be made in Bangalore and all devices will be targeted at the domestic market,” said Kharge, IT minister for Karnataka, of which Bangalore is the capital. If apple decides to turn to other contract manufacturers in the region it will help the company, Kharge said. “We did not discuss any other incentives,” he said.
There were no comments from Apple.
India is “the place to be”, Chief Executive Officer Tim Cook said on an earnings call this week. In a the company deems critical to growing the iPhone user base across the country, he sought government approval for Apple to open its own stores during his visit to the country for the first time last May. The single-brand retailers need to source 30 percent of components from within India and Apple needs to meet requirements over the long run. Manufacturing locally will help with that.
Brownie points with the national government could also be scored by making iPhones locally. As part of his “Make in India” policy, aimed at reaping the benefits that come from manufacturing facilities and jobs, Indian Prime Minister Narendra Modi wants companies to make products in the country.
In 2016, 2.5 million iPhones into the country were shipped by the company. However according to Counterpoint Research, it only ranked 10th among vendors in the December quarter while that was its best year ever in terms of revenues and sales. in India, where an estimated 750 million smartphones will be sold by 2020, Apple accounts for less than 2 percent of shipments.
Apple believes rising incomes will make the premium-priced iPhone more attractive over time even as Indian consumers currently buy mainly cheaper devices made by Samsung and Chinese brands such as Oppo.
In order to handle the capital intensive demands of building factories and hiring staff, Apple partners with contract manufacturers rather than manufacturing the devices itself. Bypassing usual partners such as Hin Hai Precision Industry Ltd. Wistron, a Taiwanese contract manufacturer, will by making Apple phones in India and would be assembled through a plant on Bangalore’s outskirts. It is said that an option for the future is Hon Hai, the main listed arm of Taiwan’s Foxconn Technology Group.
“In the longer term, it’s a great move,” Cook said on this week’s post-earnings call. “We are in discussions on a number of things, including retail stores, and fully intend to invest significantly in the country.”
(Adapted from Bloomberg)