Centre In Talks With States To Attract iPhone Production To India From China

Amidst Apple’s plans to move more of its production outside China, the Centre is reportedly in talks with multiple state governments to attract the production of the iPhone maker to India.

The government has urged state governments to create plans to expand smartphone production capacities to make India a more lucrative investment destination than the likes of Vietnam and Korea, The Indian Express reported.

Notably, Karnataka, Tamil Nadu and Uttar Pradesh governments have already committed to drawing in investments in the sector. 

Apple’s contract manufacturers in India, Wistron and Foxconn,  are currently operating in Karnataka and Tamil Nadu, respectively.

The report cited Minister of State for Electronics and IT Rajeev Chandrasekhar as saying that the Centre is informing the state governments about the opportunities in electronics and smartphone manufacturing, and many states have shown their interest in attracting investments.

As part of this push, states have been asked to look at exploring models for workers’ dormitories at manufacturing plants and the incentives they can offer to ensure that these set-ups are up to global standards.

The government plans to ensure that close to a fifth of Apple’s global manufacturing happens in India in the next five years, in line with estimates from industry experts.

Last month, Apple analyst Ming-Chi Kuo said that Foxconn would increase the production of iPhones in India. 

“As a result, iPhones made by Foxconn in India will grow by at least 150% YoY in 2023, and the medium/long-term goal is to ship 40-45% of iPhones from India (vs. the current 2-4%), meaning Foxconn’s iPhone production capacity in India will increase rapidly in the next few years,” Kuo said in a tweet.

It is prudent to mention here that the Foxconn-operated iPhone plant in China’s Zhengzhou – the largest of its kind in the world, responsible for 10% of all iPhones produced in the world – has been hit by protests over the country’s Covid-19 lockdown policy.

Due to the disruption in Apple’s supply chain in China, iPhone manufacturers in India — Foxconn, Wistron and Pegatron — have been taking up the additional burden of production. 

While they have been producing the regular models of the last three generations of the smartphone, a vast majority of the Pro models are still being manufactured in China. According to Counterpoint Research, at one point, the Zhengzhou facility in China alone was responsible for 85% of all Pro models manufactured worldwide.

However, the disruptions forced Apple to issue a warning in November that the shipments of the Pro models would be delayed.

Policy Interventions For iPhone Production In India

The Centre has also been working on policy interventions to ensure higher smartphone production in India by attracting global players to set up facilities in India.

The government has developed production-linked incentive (PLI) schemes for IT hardware manufacturing and smartphones, among others, to boost domestic manufacturing.

It has also asked the state governments to include incentives for dormitories at plants in their strategies to increase production capacity.

Crucially, the government has been making decisions with an eye on Vietnam, the other destination for electronics manufacturers looking for a way out of China. Apple’s biggest rival Samsung has reportedly committed to setting up a significant manufacturing base in Vietnam.