IBEF: September 07, 2021
According to sources aware of the development, Apple Inc. is producing 70% of the mobile phones it sells in the domestic market in India, as part of a significant push toward "Make in India."
This is a significant shift in Apple's approach following the government's Production Linked Incentive (PLI) plan, which began in FY21 and saw a 30% increase just two years ago.
Foxconn, one of Apple's three local vendors, is presently producing the best-selling model, the Apple 11, as well as the Apple 10 and Apple 12.
The Apple SE 2020 is made by Wistron, another contract manufacturer. (Pegatron, the third, has yet to begin manufacturing.)
The Apple 12 Pro and Pro Max are the only models that are imported (due to their low volume but high value).
A spokesman for Apple did not reply to questions submitted to them.
According to Mr. Faisal Kawoosa, founder of Techarc, a company that analyses volume manufacturing, Apple phones produced in India accounted for barely 5% of the total sold in India in 2017.
By 2020, it had risen to 60%. It is now 75% after the Apple 12 was also began to be made in India.
According to reliable sources, Apple's value addition for mobile devices in the country is now approximately 15%.
However, under the PLI plan, the three contract manufacturers have promised the government that they will increase this ratio to 30% in five years.
To offer a reference point, Apple’s value addition in China is approximately 40-45%.
According to sources familiar with the situation, the value addition pledged by the vendors together is clearly achievable since Apple is already in negotiations with Indian firms through its vendors to sign component agreements.
One such partnership under consideration is with Tata Electronics, which is investing Rs 4,700 crore (US$ 643.08 million) in Tamil Nadu to build a mobile component manufacturing factory.
According to analysts, Apple is increasingly reducing the time between the announcement of a new model in India and its production here.
They point out, for example, that Apple began producing the Apple SE in India in 2017, when the phone was already a couple of years old.
In India, the Apple 11 was released in September 2019 and production began in July 2020.
The Apple SE 2020 was introduced in April 2020, and production began within three to four months.
Despite the pandemic and its obstacles, the most recent model, the Apple 12, was released in October and was manufactured in less than six months.
Experts predict that the firm will generate US$ 3 billion in sales in India by the end of its fiscal year, which recently concluded in September, based on current patterns.
This is a significant increase over the previous fiscal year's figure of less than US$ 2 billion in India.
Despite the significant rise, India accounts for less than 1% of Apple's global sales, which is anticipated to reach US$ 330- US$ 340 billion this year.
Apple has selected India as a major nation in its ambitions to lessen its reliance on China as a manufacturing centre for exports, where 90% of its products are manufactured.
That is why Apple's vendors are participating in the PLI programme, which provides Apple with a 4-6% incentive if it fulfils certain investment and output goals.
Apple's contract manufacturers have agreed to produce Rs 3.4 trillion (US$ 46.51 billion) worth of iPhones in India over the next five years, with 80% of those being exported over that time.
Despite the fact that Pegatron has yet to begin manufacturing, the suppliers have already committed more than half of the Rs. 3,000 crore (US$ 410.44 million) necessary during this time.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.