Apple’s India gambit more evident: iPhone-assemblers now part of lucrative govt program

Apple's contract manufacturers in India — Foxconn, Wistron, Pegatron —- lead the pack of companies that are part of the Indian government's enticing PLI  (Production Linked Incentive) program.

Aside from these Apple iPhone manufacturers, Samsung is the other applicant for this lucrative plan.

As reported last week, the applications of these companies have been okayed by the 'Empowered Committee', which consists of Niti Aayog CEO, the secretaries of economic affairs, expenditure, revenue, the Ministry of Electronics and Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPIIT) and Directorate General of Foreign Trade (DGFT).

The Indian Cabinet will take up these applications for discussion later this week.

Indian companies like Karbonn, Lava and Dixon are also part of this popular government scheme that seeks to incentivise phone-manufacturers and make India as a production hub. This plan aims at bringing $150 billion in mobile-phone production over the next five years.

As per this scheme, manufacturing incentives will rise each year, as India hopes to entice the world’s biggest smartphone brands to make their products in India. 

But pertinently, phone-makers like Huawei and BBK Group, which manufactures brands like Oppo and Vivo, have not made any bid to be part of this program.

India & Apple, a symbiotic relationship

Apple's three major iPhone-assemblers getting to be part of this government stimulus plan is no real surprise.

Apple has been dropping enough hints of its plan to move its contract-manufacturing from companies based in China. This is something of an existential crisis for Apple, as the ties between the US and China have become extremely frosty.

And India, which is having its own problems with Beijing, is making a push in winning contracts that were once going to China. Hence it is more or less rolling out the red carpet to companies like Apple and Samsung.

It is a win-win plan for both the camps is how the market sees the development.

The plan is simple. To receive incentives, foreign manufacturers must commit to specific investment and production targets of devices that sell for at least Rs 15,000.

In the next five years, India hopes attract an additional 10% of global handset production. The bulk of the stimulus program is targeted at the export market.

India's ambitious plans

The next five years will be dramatic, and India could become the new China in phone manufacturing.

Hari Om Rai, Lava

According to a report by Bloomberg, "among the dozen phone-makers already cleared by a high-powered government committee are Apple’s primary supplier Foxconn Technology Group, which had submitted two applications, and peers Wistron Corp. and Pegatron Corp. The three companies make virtually every iPhone sold globally in sprawling factories currently located mainly in China." This marks, the report said, "a potentially seismic shift as the world’s most valuable company diversifies beyond China."

“It’s a thoughtful move by the government aimed at wooing Apple to bring significant iPhone manufacturing to India because, when the iPhone maker shifts, an entire ecosystem follows,” Hari Om Rai, chairman and founder of Lava International, India’s largest homegrown phone-maker, was quoted as saying. 

“The next five years will be dramatic, and India could become the new China in phone manufacturing,” he claimed.

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