Apple is looking at concrete plans to scale up its domestic component manufacturing in India. The iPhone maker has shared the details in a meeting with top finance ministry officials, a senior government official in the know of the matter said.
“There was a meeting in July in which Apple made a presentation. They wanted the government to know of its plans. Apple is interested in increasing its domestic component base, and is actively looking at it. The meeting focused on better understanding of supply chain and greater indigenisation. The overall growth of the smartphone manufacturing industry was also reviewed,” the official said.
The government is not receptive to any tax incentives, he added.
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In the meeting last month, senior Apple leadership met top officials from the Finance Ministry and made a presentation on its current manufacturing, supply chains, exports and the company’s participation in India’s electronics sector, he said.
An email seeking Apple’s comments remained unanswered till the time of publishing this report.
The meeting came at a time when Apple is betting on India to become a key manufacturing hub in order to diversify its manufacturing capabilities beyond China.
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‘Apple wants to indigenise faster’
“Apple wants to indigenise faster. They are eager to increase the domestic component manufacturing base in India and are actively looking at it,” the official told Moneycontrol.
The move is likely a part of the company’s diversification process of its supply chains beyond China. A major chunk of Apple's suppliers are based out of China. Geopolitical scenario, government policies and company direction may be prompting it to diversify to other countries.
Also Read | Tata Group closes in on deal to become first Indian iPhone maker
The company has, so far, relied on contract manufacturers, such as Foxconn, Wistron, and Pegatron, for the local production of iPhone units. Their ecosystem of component suppliers include Foxlink, Flex, Salcomp, Avary, Sunwoda and Jabil, which help manufacture iPhones.
The US company makes almost 7 percent of its iPhones in India by expanding partners.
Apple started manufacturing iPhone in India in 2017. Since then, the company has worked with suppliers to assemble iPhone models and produce a growing number of components. The iPhone maker, on April 18, 2023, opened its first Indian store in Mumbai and the second one in New Delhi on April 20.
Leader in India's premium smartphone market
Apple clocked iPhone exports of about $5 billion-$5.5 billion from India in FY23, accounting for nearly half of the country's mobile phone exports, according to estimates from industry sources.
Apple is the leader in India's premium smartphone market (above Rs 30,000) and also in terms of shipment value in Q4FY2022, according to a report by Counterpoint Research.
Also Read | Apple Supplier Foxconn plans $500 million component plants in India
It clocked record shipments of over 6.5 million in 2022, registering a 16 percent growth, YoY, the firm noted. The company's overall market share in India's smartphone market is, however, still around 5 percent.
Overall, smartphone manufacturing has received a boost from the government’s production linked incentive (PLI) scheme. Under the scheme, the government estimates a total incremental production of Rs 10.05 lakh crore, exports of well over Rs 6.5 lakh crore and direct and indirect jobs of up to at least 8 lakh, maybe more by 2026.
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