Apple Looking To Shift A Fifth Of Its Manufacturing From China To India; Targets $40 Bn Worth Mobile Production In 5 Years

Apple is examining a proposal to shift nearly one-fifth of its production capacity from China to India and ramp up it’s local manufacturing capabilities through its contract manufacturers and achieve $40 billion worth of production over the next five years, The Economic Times reported.

The report quoted top ranking Indian government officials as saying that they expected Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, availing the benefits under the recently unveiled production-linked incentive (PLI) scheme.

In March this year, the Union Cabinet had taken major decisions to enhance manufacturing in the electronic components, semiconductors and mobile segments including launch of three different schemes - Production-linked incentive scheme (PLI) - Scheme for promoting manufacturing of electronic components and semiconductors'' (SPECS)-Electronics Manufacturing Clusters (EMC) 2.0

The PLI scheme offers a production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including assembly, testing, marking and packaging (ATMP) units.

It will extend an incentive of 4 per cent to 6 per cent on incremental sales (over base year) of goods manufactured in India and covered under target segments to eligible companies for a period of five years subsequent to the base year as defined.

Centre had earmarked a budgetary outlay of Rs 40,995 crore for five years under this scheme.

According to ET report, Apple has also raised few reservations on the the government's ambitious PLI scheme which still needed to be ironed out.

Prime Minister Narendra Modi has met top executives of Apple, Samsung and homegrown phone maker Lava on December 28 last year, which kick-started the process of rolling out incentives to attract hi tech manufacturing to India

India has been attempting to build a robust domestic manufacturing sector in smartphones through a calibrated multiyear programme under which tariffs are introduced gradually on smartphone components, beginning with basic accessories such as chargers in 2016 and working up to touch panels.

Wistron is already making Apple’s low-priced iPhone SE model since 2017 in its Bengaluru unit. It currently assembles the iPhone 6S and 7 models there as well.

Wistron’s second iPhone plant in Bengaluru will make iPhone 7 and 8 models, some of which will be exported.

Wistron's rival, Foxconn, which began making iPhone XR models in India last year, already assembles PCBs locally. India however continues to be dependent on China for supplies of other smartphone parts like display panels and camera modules. In 2018, Samsung opened the world's largest mobile factory, in Noida, India.