After years of regulatory hurdles and discussions with the Indian government on local sourcing norms, premium smartphone maker Apple has started manufacturing iPhone 7 model in India, in addition to iPhone SE and iPhone 6s.
An Apple spokesperson reportedly said, “We are proud to be producing iPhone 7 in Bengaluru for our local customers, furthering our long term commitment in India.”
At present, iPhone SE is made in India for Apple by contract manufacturer Wistron in Bengaluru, and at the same time, trial runs of locally built iPhone 6s Plus handsets have also started.
It is being speculated that with this, Apple may explore the possibility of exporting the devices to global markets and that the company will invest the margins made from these devices into a more aggressive sales and marketing play.
A Bloomberg report said that Apple’s Chinese contractor, Foxconn Technology Group, is just weeks away from starting trial production of the iPhone X range of devices in India, before it starts full-scale assembly at its factory outside the southern city of Chennai.
The development comes after Indian minister of Commerce and Industry and Civil Aviation, Suresh Prabhu, met the leadership board of Apple Inc in Davos, Switzerland, in January. The meeting included discussions on a deal to set up an Apple manufacturing unit in India.
According to the minister, the Indian government has been in talks with the company for setting up the manufacturing plant. It was reported that Apple has requested an exemption from duty on manufacturing and repair units along with components, capital equipment and consumables for smartphone manufacturing.
The company had also sought tax concessions for a period of 15 years. One such tax is the 30% mandated levy on local sourcing of the components. Prabhu said that the government will look into these demands as it might be a good time for Apple to foray in India.
It was recently reported that Wistron received the government’s approval for its INR 5,000 Cr proposal to expand its manufacturing capabilities with the aim of locally producing high-end Apple devices.
Apple held only 2.5% share in the Indian smartphone market at the end of December 2017 period, and is continuously losing its share to Samsung and OnePlus in the country, according to a CounterPoint report.
During Q2 2018 earnings call, Apple CEO Tim Cook had said that India is the third largest smartphone market in the world and there are huge opportunities for Apple in India, while accepting that they have an extremely low share in that market overall.
Going ahead, the company has showed its intent to bring all its initiatives to the Indian market including retail, as it sees a big opportunity in the South Asian nation. And the company is struggling to make its presence in the market dominated by Samsung, Xiaomi and other chinese smartphone makers. Apple’s premium handsets have been facing stiff competition from Xiaomi’s OnePlus range and Samsung S9 and above series.
A report by Canalys said that India has now overtaken the United States to become the world’s second-largest smartphone market after China. Smartphone users in India are projected to reach 829 Mn by 2022 as the country is currently the world’s fastest-growing smartphone market with 23% CAGR.