Apple may shift a fifth of its production capacity from China to India: Report

US tech giant Apple Inc is reportedly planning to move a massive chunk of its production capacity from China to India. The Cupertino-based company plans to move around a fifth of its production capacity to India.

According to reports, Apple wants to reap the benefits of the Indian Government’s new PLI (production-linked incentives) scheme to encourage local production in the country. A senior government official told The Economic Times; “We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, availing the benefits under the production-linked incentive (PLI) scheme.”

The move could make Apple’s the largest exporter in the country. The tech giant currently holds a small share of the Indian smartphone market, which means moving a massive chunk of its production to the country could only be for export purposes. Apple only produces the iPhone 7 and iPhone XR in India, while production of the older iPhone SE and iPhone 6S has already been discontinued.

Several global tech giants are currently looking to move their manufacturing plants out of China, amid the coronavirus pandemic, which originated in Wuhan, the provincial capital of Hubei China. Japan has already announced USD 2.2 billion in monetary support for Japanese-based businesses to shift their production and manufacturing out of China. The US is expected to follow suit and India is looking to capitalize on that.

While the company has not confirmed the reports yet, a source close to the matter said there were some disputes which need to be ironed out.  “There are some problems with some of the clauses. For instance, valuing the entire plant and machinery already in use in its plants across China and other places at 40% of that value and the extent of the business information sought under the scheme are some of the irritants,” the source told the publisher.

In the last quarter, Apple held 62.7-percent market share in India’s premium smartphone market. However, that accounts for a fraction of the company’s overall smartphone market. In fact, Apple sells phones worth approximately USD 1.5 billion in India, of which less than USD 500 million are manufactured locally. However, the tech giant is a top investor in China, producing merchandise valued at USD 220 billion in 2018-19, of which USD 185 billion worth of goods were exported. Apple, directly and indirectly, employs over 4.5 million people in China.