January 24, 2021

Top Apple manufacturers commit $900 million to manufacturing incentive plan in India

Image from Business Standard

Foxconn, Wistron and Pegatron plan on investing a sum of $900 million into the production-linked incentive plan of the government. The PLI scheme offers cash rewards to all manufacturing units which have an increase in sales of locally produced units as compared to 2019-20 levels. The aim of the plan is to boost manufacturing and promote India as a manufacturing hub. While it is unclear if the entirety of the investment will focus on iPhones, sources revealed to Reuters that a large sum will surely focus on the Apple smartphone.

Image from Business Standard

Foxconn, Wistron and Pegatron are all contract manufacturers for Apple Inc. While they manufacture for several companies worldwide, Wistron in India works only on Apple’s devices. Wistron has been pushing to double it’s production rate in order to meet the export demand of the iPhone SE. This plan is also expected to create several jobs. Foxconn also assembles devices for Xiaomi in India but is well equipped to use the PLI to boost assembly of iPhones in their manufacturing units. Pegatron is yet to start production in India but is currently in talks with several state governments to establish their units. This plan will allow Apple to move beyond China as a manufacturing hub as the nation is anyway locked in several trade wars.

Tarun Pathak, a tech researcher at Counterpoint said,”India is key to Apple’s global ambitions as it expands beyond China.It offers a strategic market to them where skilled labor is cheaper as compared to other manufacturing destinations, the size of the internal market is huge and the export potential is enormous.” Apple accounts for only 1% of smartphone shipments in India. With the reveal of their online store last week and plans to open a retail store in Mumbai next year, Apple aims at changing their market stand. With a boost in local manufacturing, Apple will be able to save up on duties that they pay to import fully-made devices. This should also cause a change in the pricing of the premium devices.