Govt May Let Chinese Vendors Of Apple To Set Up India Production

The Indian government may allow some of Apple’s Chinese vendors to set up manufacturing plants in India, according to media reports.

Per an ETTelecom report that cited officials in the know, the government will allow Chinese Apple iPhone makers to set up production in India on a case-by-case basis, after ensuring that Apple does not have any other source for components.

The government is open to investments by Chinese entities that offer tech and production capabilities, the report added. The official cited in the report noted that the government will allow a Chinese vendor unless there’s an alternative to the technology elsewhere. The government will also suggest a technology transfer for local manufacturing.

For now, Apple has been asked to furnish a list of vendors. The government will choose the ones necessary for Apple to set up shop in India.

The government amended the foreign direct investment (FDI) policy in 2020, mandating a prior government nod from FDI coming from countries India shares a land border with. This move was to curb Chinese investment in Indian corporates. However, the government had argued that the move was to protect Indian companies from opportunistic takeovers by foreign entities.

It is important to note that Apple has steadily stepped up production in India for the past few years. The Cupertino-based giant is now incentivised to step up its production in India after the government announced the production-linked incentive (PLI) scheme for manufacturing consumer electronics in India.

The government of India has also asked Apple to increase production in India to reach a production value of $5 Bn per year. For the current fiscal year, the tech giant has set a production target of INR 47,000 Cr for India. The increase in production in India is coming at a time when the demand for Apple products in India is at an all-time high.

Per a report by CyberMedia Research (CMR) Apple sold more than 1.2 Mn iPhones in the country in Q2 2022, representing a surge of 94% year-on-year (YoY). Apple is expected to have a 4% market share in smartphones and a 20% market share in tablets. Further, Apple shipped 50% more PCs to Indian enterprises YoY in H1 2022.

Industry experts also estimate that Apple will ship around 570,000 units to India, an increase of 54% YoY from 370,000 units shipped in the corresponding quarter last year.

Reports from earlier this month noted that Indian salt-to-software conglomerate Tata Sons was reportedly in talks with Taiwan-based iPhone maker Wistron to set up a manufacturing facility in India. Brokerage firm J.P. Morgan estimates that India will account for 25% of all iPhone production in the world by 2025.

Currently, Apple is manufacturing iPhones 12 and 13 in the country and is set to start the production of iPhone 14 in India by October 2022.