Apple is considering moving about 20% of its iPhone production capacity in China to India in the wake of massive supply chain disruption in the country of origin of the coronavirus. In addition, it intends to increase its manufacturing revenue through contract manufacturers in India to a worth of about $ 40 billion in the next five years.
There have been several meetings between Apple’s senior executives and senior government officials over the last few months. A senior government official said, “We hope that Apple will increase smartphone production to $ 40 billion through its contract manufacturers Wistron and Foxconn and a large part of it will be exported.”
The company will take the incentive under the Production Linked Incentive (PLI) scheme for this.
Apple may not be sure whether to opt for PLI
Apple did not respond to an email query about the decision — if at all they have reached a conclusion from the meetings. However, sources aware of the company’s plans said that the government’s ambitious PLI scheme has some shortcomings.
The PLI scheme was recently announced to promote handset manufacturing and export in the country.
To take advantage of the PLI scheme, a company has to manufacture at least $ 10 billion worth of mobile handsets in the country in a phased manner between 2020 and 2025.
According to government data, between April 2019 and January 2020, the country’s total exports were about $ 446 billion. The largest category under this was of petroleum products with exports of $ 36 billion.
Will Apple take up this challenge?
Apple’s 38% stake in handset exports
Apple has in China directly and indirectly employed about 48 lakh people. Apple has a market share of 38% in global handset exports. In second place is Samsung with a market share of 22%.
Another senior government official said that India was considering acquiring a major share of global exports.
Apple sales in India generate about $ 1.5 billion. In comparison, its production in China is worth about $ 220 billion, of which it exports products worth $ 185 billion.
Political will exists
Officials say they will try to allay the apprehensions associated with the PLI scheme. The government wants to bring high-tech manufacturing to the country. Prime Minister Narendra Modi had a meeting in December last year with senior executives of Apple, Samsung and domestic handset company Lava.
An official said, “India is not a huge market for Apple as the company sells only a part of its production in the country. Apple plans to make India a manufacturing and export base so that it can diversify its production outside China.”