The coronavirus pandemic has forced many companies to diversify their supply chain and move a certain extent of their production out of China. Apple is no different and while it is producing some of its devices in Vietnam, it could be looking at making India an export hub for its products.
A number of meetings between senior Apple executives and Indian government officials over the last few months have opened up the possibility of Apple moving nearly one-fifth of its production from China to India. The move could see Apple scale up local manufacturing efforts in India via its contract manufacturers like Foxconn and Wistron to $40 billion over the next five years. The move could make India the largest exporter of Apple products.
We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, availing the benefits under the production-linked incentive (PLI) scheme.
There are some issues with the Indian government’s PLI scheme though that is aimed at pushing local production of smartphones in the country. Government officials are looking into the concerns that Apple has and will try to resolve them. The Indian market itself is not a big one for Apple, but the government wants to turn India into a manufacturing and export hub for Apple products. The PLI scheme will require that Apple or any other company that applies under it manufactures at least $10 billion worth of smartphones between 2020 and 2025 to avail all the benefits. There are also other yearly targets which the companies must meet.
Many analysts are skeptical of the PLI scheme and the investments it will bring because they believe India does not have the required ecosystem for such a large scale deployment.
“We don’t have ecosystem ready, which could support any large-scale deployment. The ecosystem right from skilling to ancillaries is almost negligible. This weakens confidence of anyone wanting to plan big and long term,” said Faisal Kawoosa, founder at research agency TechArc.
The Indian government has long tried to woo Apple to manufacture iPhones in India. While the company does manufacture iPhones through its partners Wistron and Foxconn, it only produces older iPhones like the iPhone 7, iPhone 8, and iPhone 6s to meet local demand and for meeting demands of other nearby markets. If Apple ends up producing iPhones locally in India, it could also help the company reduce the prices of its products in the country as it would then end up saving on various import and custom duties.
[Via Economic Times]