India scouting to become Apple's iPad next manufacturing hub, say reports

India is exploring options to bring some of Apple’s iPad production to the country from China, two sources close to the Indian government told CNBC.

Reportedly, the tech behemoth is in discussions with authorities. While no specific plans have been established, if the initiative is successful, Apple's presence in the country would increase.

Following nationwide protests that have taken place over the past two weeks in response to Beijing's tough zero-Covid policy, the tech giant announced plans to diversify more of its supply chain away from China. Apple issued a warning in early November that iPhone shipments will be delayed as a result of the Chinese government's lockdowns, and analysts have been lowering their expectations for the crucial holiday shopping period.

Also read | After fanning COVID fears, China must now try to allay them

Over the weekend, The Wall Street Journal reported that Apple is aggressively exploring to move production out of China to other Asian nations, including Vietnam and India.

Moneycontrol could not independently verify these reports.

However, sources warn that similar ambitions in India could be slowed down by a shortage of highly skilled workers and people with experience in creating complex products like the iPad. The backdrop of foreign policy, with rising hostilities between China and India, is particularly unhelpful. Due to recent territorial disputes between the two nations, the military presence near the China-India border has increased.

Also read | India has a $1.2 trillion plan to snatch factories from China

Moreover, ET reported that India is set to emerge as a major hub for iPhone manufacturing as well as US-based Apple looks to diversify production units outside China. Industry leaders and analysts anticipate that, from its present level of 5%, the proportion of locally produced iPhones will increase to almost a fifth of the entire output in value during the next three to four years.

The report further said that Apple produced smartphones worth $205 billion in its fiscal year ended September 2022. In 2022, mainland China's share of worldwide shipments will be between 91.2 and 93.5%, down from 95.8% in 2021 and 98.2% in 2020, according to Counterpoint Research.

There is also a general growing trend of manufacturing companies shifting their base from the neighbouring country to India.

"The interesting thing is that India is really bucking this trend...and it speaks very well for the policies that the government has pursued and the general buoyancy of the Indian market is very good," veteran investor and Mobius Capital Partners' founder Mark Mobius had said in an interview to CNBC-TV18.

The protests in China have reportedly affected its production capabilities and also dented China’s reputation as a stable manufacturing center leading to India's benefit.