Celebrating 25 years in India, Apple opens 2 flagship stores in Mumbai and Delhi. This comes amid a decisive move by the iPhone maker to rely less on China. Since last year, Apple has been seeking to diversify away from China, where much of their manufacturing has been based, after strict Covid policies last year and ongoing tensions with the United States which continue to escalate. This move also clearly underscores how China is at risk of losing its status as the world’s largest producer of consumer electronics.
This also comes as a big achievement for the Modi government and a big boost to it’s ‘Make in India’ strategy. The Modi govt has been actively trying to close India’s tech gap with China and amid the West's souring relationship with Beijing, India has been looking to position itself as a parallel manufacturing hub.
The US-based smartphone maker is set to see its production in India rise rapidly as Apple’s three major manufacturers, Foxconn, Pegatron and Wistron are looking to actively scale up iPhone manufacturing in India. And with the two new flagship stores opening, it could take the total iPhones made in India to 20% of the global output, up 4X from 5% currently, according to industry executives cited in an Economic Times report.
India has approved a $967.91 million investment by Foxconn to build its plant in Karnataka. The Taiwanese company is planning to build the plant close to Bengaluru airport on a 300-acre site. This investment by Foxconn is one of the biggest single outlays in India so far.
Foxconn is also likely to spend $200 million in setting up factory for the manufacture of AirPods. This plant will be set up in Telangana. Air Pods are currently made by a range of Chinese suppliers.
Foxconn, also known by its official name Hon Hai Precision Industry, is the world's biggest contract electronics manufacturer and assembles gadgets for many international brands including Apple.
Both these projects are among Foxconn’s biggest outlays to date in India. Together, these projects have the potential to create 1 lakh jobs each in both states. With Foxconn entering India in a big way, this will also pave the way for more ancillary industries to set up shop in India as well.
Meanwhile, Tata Group is set to complete the takeover of Wistron's iPhone plant in Bengaluru by the end of April. This will be India's first homegrown production line for Apple products. This also gives India more leverage to protect the economy and its domestic players while allowing a multinational company to enter the nation.
The Yamuna Expressway Industrial Development Authority (YEIDA) said in December in 2022 that some Apple suppliers have applied for land with a proposed investment of Rs 2,800 crore. As per YEIDA CEO Arun Vir Singh, the companies have already deposited 10% of the proposed allocation for land in Sector 29 near the upcoming Jewar airport in Greater Noida. As per Business Standard, the Apple suppliers, along with a known camera parts maker, proposed to set up a unit on about 23 acres of land with a proposed investment of ₹ 2,800 crore.
Tim Cook believes that India is "hugely exciting market” where the technology giant is putting a “significant amount of energy” through investments as India is providing more friendly local manufacturing policies.
India is the world's second-biggest smartphone market. However, smartphone penetration is lower in India compared to the U.S. and China. While India's smartphone penetration is roughly around 45%, U.S' and China's stay at 73% and 63% respectively. This means Apple will find more business in India compared to U.S and China. In fact, as per reports, India's premium smartphone market last year was dominated by Apple products. That is, one in every 20 smartphones purchased in India the previous year was an iPhone.
As per a Bloomberg report, Apple has assembled more than $7 billion iPhones in India last fiscal year. In fact, 7% of all its iPhones are made in India currently. This is a big jump from Apple producing just 1% of the world’s iPhones back in 2021. Reports also suggest, that this share could go up to a whopping 50% by 2027.
On the exports front, As per reports, Apple exported over $5 billion of iPhones in the year ended March 2023, nearly four time higher than the previous year. Apple iPhone is reportedly the first brand that surpassed $5 billion in exports from India.
India is also open to Apple's Chinese vendors setting up local joint ventures. This lets Apple to speed up capacity building and local value addition. Apart from this Apple is receiving incentives to build a local vendor ecosystem.
