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Can India become a key manufacturer for Apple’s iPhones as Tata group enters the fray?

Apple iPhones: Made in India

After Foxconn Hon Hai and Pegatron, all eyes are now on the Tata Group, which has acquired Taiwanese major Wistron Corp’s India manufacturing unit in a bid to make Apple’s iPhones in the country amid the Centre’s push for production-linked incentives (PLI) scheme to boost manufacturing.

For one, Apple wants to grab a larger share of the Indian market, which has traditionally remained a price sensitive one dominated by Android players. But with the growing middle class and rising aspirations, India has been registering a steady growth in its iPhone sales. It now features in the list of Apple’s top five markets globally.

Statistics reveal that consumers eyeing the premium category of smartphones are largely opting for iPhone instead of other brands at similar price points.

“With the Tatas now coming into the fray, it will be interesting to see how the market for mobile phones reacts. Importantly, the Tata group will be in a better position to manage the Indian market and even the manufacturing facility being a domestic player,” a person who is involved in the process said.

Apple Inc’s top boss Tim Cook, who visited India earlier this year, said India is a focus market for the company.

“India is an incredibly exciting market. It’s a major focus for us,” he said, adding that the country is at a tipping point. Cook added that the vibrancy in India is unbelievable. During an earnings call, Cook, who mentioned India as many as 20 times, said that there are a lot of people coming into the middle class.

In September, V Lee Foxconn’s representative in India, taking to LinkedIn announced doubling of investment and employment in India. The company’s investments in India are currently estimated at around $8 billion. China accounts for more than 70 per cent of Foxconn’s global operations.

“The question is not about whether India can surpass China, the question is to increase manufacturing of iPhones in the country and provide a credible and important base for making the phones,” the person said.

Foxconn already has nine campuses in India.

“We have over 30 factories in India. The turnover and business size are roughly $10 billion annually. We have over 20 dormitories that shelter tens and thousands of employees that work with Foxconn in India,” Liu said, adding that the company’s revenue, investments and number of employees have grown exponentially since it started operations in India.

Earlier a report by Nikkei Asia noted that India’s large consumer base, labour pool, youthful demographics, highly skilled professionals along with steady economic growth and rising incomes will drive the new wave of investments.

According to Reuters, the Wistron board gave a go-ahead to the sale of Wistron InfoComm Manufacturing India Private Limited to Tata Electronics Private Limited for an estimated $$125 million.

Besides, exports of ‘made in India’ iPhones are increasing too.

However, challenges remain.

A large chunk of the components required for the iPhone are still being imported. This attracts higher duties, making the overall cost of the phone more expensive compared to other markets. While the government has been strengthening the supply chain, it will take time.

Smallcase.com, a platform facilitating investment in stocks, said that China’s smartphone manufacturing industry developed over several decades, while the PLI scheme in India has generated a significant number of jobs but hasn’t yet entirely reshaped the supply chain.

India, which is aiming to touch a $5trillion economy now needs to shift gears and focus on removing roadblocks at the earliest. This will not only help Apple Inc but the manufacturing sector in general.

Also read: iPhone maker Foxconn plans to set up another factory near Bengaluru