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Apple looks to make inroads in India by shifting its manufacturing base

Author at TechGenyz Insights
apple production shift china to india

According to reports Apple is examining the possibility of shifting around a fifth of its production from China to India. The American tech-giant looks to utilize the benefits under the Indian government's ambitious production-linked incentive (PLI) scheme.

Apple plans to shift to India

There have been multiple meetings between Apple's senior executives and India's top-ranking government officials in the last few months where they have discussed the possibility of Apple shifting a sizable chunk of its production to India. Apple aims to scale up its manufacturing revenue, through its contract manufacturers Wistron and Foxconn with a target of approximately $40 billion within a timeline of five years.

The PLI i scheme is designed to attract large-scale electronic manufactures to India. However, the American company hasn't given a green signal yet. According to sources close to the company, the iPhone maker is still trying to negotiate around certain clauses of the PLI, which are proving to be deterrent.

Possible Reasons for the shift

Apple has stated the as per the PLI the valuation of the current manufacturing unit in use is well below the acceptable figure. The move from the iPhone maker comes at a time when tensions between the US and China are at the highest owing to the Covid-19 pandemic.

Challenges

The expert, however, is sceptical whether only addressing the issues in India's PLI scheme will be enough to attract the Cupertino based company. According to them the Indian manufacturing ecosystem still lags behind. And this will breed doubts in any company planning for setting up production and manufacturing for a longer-term.

Impact and Apple's future plans

According to a senior government official, they expect Apple to produce up to $40 billion worth of smartphones, and that too mostly for exports. This means if Apple actually makes the shift, it would become India's largest exporter.

It has never commanded much of a market share in India. According to the International Data Corporation (IDC), Apple managed to accumulate around 62.7 per cent of the market share in India’s premium smartphone market in the last quarter. Such was the impact that it dislodged OnePlus from the first place.

Reports also say that Apple is stepping up retail efforts in the country. Apple sales occur in India mainly through resellers. But the company is planning to set up retail stores in India. Reports suggest that the first Apple retail store will be ready by next year.

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28 May 2020, 6:25 AM (GMT)

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