The report of the localization of Apple iPhone 11’s production comes within weeks of the news that suggested Foxconn, the Taiwanese contract manufacturer, is planning to invest a staggering $1 billion in its production facility outside of Chennai. It is currently using this facility to assemble iPhones from the parts collected from various sources, especially from countries outside of India.
Commerce Minister Piyush Goyal announced the news on Twitter. Goyal wrote,
Significant boost to Make in India! Apple has started manufacturing iPhone 11 in India, bringing a top-of-the-line model for the first time in the country.
Foxconn is the second Apple contract manufacturer that has acted upon creating or improving its presence in India in the recent past. Pegatron’s registration of a subsidiary in India can be again seen as a step to localize production by Apple. All these current events make sense as they are entirely in line with what the Indian government is trying to achieve with its Make in India initiative.
The investment from Foxconn and Apple’s move would mean reduced dependence on China for procuring parts to assemble these pricey phones that are huge favorites of consumers in India. The entire process, including the Foxconn investment to be used for building a state-of-the-art production facility, could take a few years to materialize. However, the announcement can be seen as a big push to the companies that are planning to build electronic products from scratch in India – making the country self-reliant and a boost to Make in India campaign.
In an interview with a local Indian news channel, Neil Shah, Vice President (Research) at Counterpoint, said,
With India’s labor cheaper compared with China, and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub.
If Apple iPhones are produced in India, it could save Apple more than 20% in import duty. Apple is also in talks to start the production of its newest model, iPhone SE, in its manufacturing plant in Bengaluru. This is the same production facility where the earlier version of the iPhone SE, which is no more in circulation, was built.
In its bid to welcome global players to set up their electronics manufacturing plans in different parts of the country, India brought its very own $6.65 billion plan. As part of this plan, India’s government will offer production linked incentives to five global manufacturers of smartphones to expand or set up production in India.
The recent growth in the localization of Apple’s production in India can also be seen as a way to benefit from GOI’s production linked incentive scheme. Another reason could be the existing relations between the US and China. Apple is slowly and steadily working towards moving bulk of its manufacturing from China to India, being mindful of the worsening of Sino-US ties.
The report of Foxconn planning to make a huge investment in its plant that is located a few kilometers outside of Chennai will take place in a phased manner in the next three years. In addition to boosting the Make in India initiative, Foxconn’s plan will also create 6,000 new jobs in Tamil Nadu. Foxconn already has a plant in Andhra Pradesh that is used for making smartphones for several brands, including the Xiaomi Corp of China.
This investment by Foxconn could be the first of many more to come. With investments from global manufacturers, India can also become an export center, creating more jobs and turning Make in India initiative a reality.