Make in India: Apple to shift big chunk of iPhone production from China to India
With China being the epicentre of the COVID-19 outbreak, most of the global hardware and technology companies are rethinking their business plans. To cash in on the opportunity, central and state governments of India are coming up with lucrative incentives to attract them.
Now, Apple is reportedly planning to shift one-fifth of the iPhone manufacturing facilities to India. For the last few months, top company officials have been meeting union bureaucrats multiple times and are in final stages of talks, The Economic Times reported citing a central government official.
It has come to light that there are some tricky issues related to PM Modi government's PLI (Production-Linked Incentive) scheme that offers incentives to large production companies.
Once the negotiations get cleared, Apple will soon give nod to its supply partners Wistron and Foxconn to mass-produce iPhones not just for the local consumption, but also to export them to overseas markets.
If things fall into place, Apple can make $40 billion (roughly Rs 3.11 lakh crore) worth business with just exports alone within the next five years. It will be the single biggest company to do so in India.
As of now, Apple has a minuscule of 2% share of the overall Indian phone market in terms of sale of units, but the revenue-wise, it makes pretty good compared to market leaders.
Thanks to iPhone XR (2018) and the iPhone 11 (review) series, Apple has made big in-roads in Rs 35,000 and above price segments and commands a remarkable 62.7 % of market share in the premium category in late 2019 and early 2020. The iPhone 11 alone accounted for 68% of all premium phone shipments in the Q1,2020 in India, International Data Corporation reported.
If Apple begins local production of the latest iPhone models, Cupertino-based company will get custom duty exemptions and pass on the benefits to the consumers in India.
The new iPhone SE (2020) launched in April is a potential model for Make in India project. It costs $399 (around Rs 30,290) in the US, but Indians have to shell out Rs 42,500 for the base model.
PLI scheme: All you need to know
Union government officially notified the PLI (Production-Linked Incentive) scheme in April 2020. It is aimed to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components including Assembly, Testing, Marking and Packaging (ATMP) units, the government of India states in the official press note.
Also, the PLI scheme includes an extension of the incentive of current 4% to 6% on incremental sales (over the 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.
The total cost of the proposed scheme is approximately Rs 40,995 crore, which includes an incentive outlay of approximately Rs 40,951 crore and administrative expenses to the tune of Rs 44 crore.
It can be noted production of mobile phones in India has grown from Rs 18,900 crore (USD 3 Billion) in 2014-15 to Rs 1,70,000 crore (USD 24 Billion) in 2018-19.
The central government is keen to sort out the irritants of the PLI scheme with Apple and make India a big iPhone export hub.
Besides Apple, Samsung, and domestic player Lava International, among others have shown interest in the PLI scheme and boost phone production in India.
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