Make In India: Apple's Chinese Suppliers Get Nod To Form JVs With Indian Firms To Set Up Manufacturing Facilities

The government has reportedly given preliminary clearance to several Chinese suppliers of Apple, allowing them to form joint ventures with Indian companies to set up facilities in the country.

The move is aimed at expanding the local value chain in iPhone and electronics manufacturing.

Fourteen out of the 17 Chinese suppliers that approached the government have received the initial clearance, reports Economic Times.

These companies include Luxshare, Sunny Optical, Han's Laser Technology, YUTO Packaging Technology, Strong, Salcomp and Boson. These firms supply components to other smartphone and electronics brands as well.

According to officials cited in the ET report, the government has clearly stated that these Chinese firms would not be allowed to set up their wholly-owned entities in India and that they must form JVs with local companies.

The Chinese suppliers will get final approvals to start manufacturingat a later stage, after they form JVs with Indian firms.

"We want Indian champions to emerge in the supply chain and that will happen when Chinese majors partner with local firms. Full due diligence will be done while giving approval so that the interest of India is not hurt," a government official was quoted in the report as saying.

The goal of the government behind the decision is to increase local value addition and achieve self-sufficiency in the electronics manufacturing industry.

Without the participation of Chinese companies, it would be challenging to establish a manufacturing ecosystem for Apple products in India.

As China is a significant player in the global electronics manufacturing ecosystem, it is essential for these suppliers to come in and replicate their success in India.

“The importance of expertise is necessary, and China is the main link in the global elec-tronics manufacturing ecosystem,” a second official was quoted in the ET report as saying.

“China has been Apple’s mother factory and if the success can be replicated here, the suppliers have to come," the official added.

Currently, local value addition in iPhone manufacturing in India is around 18 per cent, but with the Chinese suppliers joining forces with Indian companies, it could potentially increase to 50 per cent.

Luxshare Precision, for instance, is one of the top contract manufacturers for Apple and produces Apple Watches, AirPods, and iPhones. Sunny Optical, another supplier, manufactures camera lenses for iPhones.

Chinese suppliers are already seeking partners in India, and are in initial talks with numerous local companies like Tata Group, Lava International, and TI India.

These Chinese suppliers who enter India through joint ventures will also be eligible to participate in the upcoming Production-Linked Incentive scheme for component manufacturing.