Amid the government's efforts to make India a major player in electronics manufacturing, one name that stands out is Apple. The Cupertino-based company, which previously relied on facilities in China to manufacture iPhones, has moved a significant portion of its assembly operations to India.
India exported about $15 billion worth of smartphones in 2023-24, of which iPhones accounted for 65%, or about $10 billion, up from $5 billion a year earlier. Taiwan's Foxconn, the world's largest contract electronics manufacturer, has a large iPhone assembly operation in India, and Indian company Tata Electronics has also won its first iPhone assembly contract.
Apple is also a major employer in its assembly plants in India, where the majority of workers are women. “Apple currently directly employs 1.5 million people and that number will grow significantly in the coming years,” Electronics and IT Minister Ashwini Vaishnau told The Indian Express. IT ministry officials estimate that the supply chain ecosystem will expand to employ nearly 500,000 people over the next three years.
The company's expansion has led to many overseas suppliers setting up shop in the country. “All major players in the supply chain ecosystem for components such as camera modules, communications, power supplies and digital signal processing are actively looking to set up operations in India,” Vaishnau said.
This automatically significantly improves the infrastructure of the neighborhood. In Sriperumbadur, Apple's main manufacturing hub, about 40 kilometers from Chennai, the capital of Tamil Nadu, Foxconn has built two large iPhone assembly plants and two large-scale facilities for mainly female workers. There are many dormitories, and construction is progressing on the model of China's iPhone city Zhengzhou.
According to Bloomberg estimates, one in seven iPhones sold worldwide in fiscal 2024 was made in India. The government expects that by 2028, a quarter of all iPhones will be manufactured in India, and some accessories such as AirPods will also be assembled in India. Apple wants to increase iPhone production in India to more than 50 million units a year over the next two to three years.
New Delhi's unfavorable attitude toward companies from the mainland and high tariffs on component imports also face Apple suppliers planning to locate in India, although the efficiency of India's new iPhone units still falls short of Chinese factories. It has become an obstacle. .
However, due to factors such as government subsidies under the Production-Linked Incentive (PLI) system for smartphone production, deteriorating U.S.-China relations, and the Chinese government's strict measures to prevent the spread of the coronavirus, Apple has lost a significant portion of iPhone assembly. Part of it will be moved to India.
Apple's contract manufacturers Foxconn, Pegatron and Wistron (acquired by Tata in October last year) have managed to meet the essential revenue and investment criteria to secure payment under the PLI scheme. The government has not disclosed the breakdown of payments to individual companies, but three Apple assemblers, Samsung and domestic electronics maker Dixon are expected to receive more than Rs 4.5 billion for achieving PLI targets in FY23. It is understood that there are.
Foxconn, India's largest iPhone assembly company, currently employs more than 40,000 people at its factory in Tamil Nadu. Pegatron's operations are relatively small, with approximately 10,000 employees. He has 27,000 employees at the Winstron plant, which was recently acquired by Tata.
With Apple's expansion, companies such as Google have expressed interest in assembling mobile phones in India. Domestic contract manufacturing companies are also emerging, with Tata Electronics, Dixon, VVDN, and Keynes stepping up their services for assembly orders from overseas smartphone manufacturers. India has a large workforce for this category of assembly work, which is relatively easier and requires a higher skill set than component manufacturing. “Contract manufacturing is a complex process and requires precision work. Over the last few years, Indian manufacturers have perfected these processes to meet global standards and requirements,” Vaishnau said. .
In addition to Foxconn, Pegatron and Tata, which assemble the iPhone, there are 11 other companies that have set up bases in India to supply the various components needed to make mobile phones.
Foxlink, a subsidiary of Taiwan's Cheng Uei Precision Industry Co Ltd, is based in Andhra Pradesh and manufactures cables for iPhone chargers. Apple sources its battery packs from U.S.-based Flex Ltd., which has factories in Pune, Chennai, Bangalore and other locations. Sunwoda Electronic Company Ltd, based in China with a factory in Uttar Pradesh, is also a battery supplier to Apple. Jabil has a factory in Pune where he manufactures the plastic cases and enclosures for AirPods, which are shipped to China and Vietnam where the earbuds are finally assembled. Apple sources its chargers from China's Lingyi iTech (Guangdong) company, which has a factory in Chennai.
Some foreign suppliers have started manufacturing in India, but this number is only a fraction of Apple's suppliers in China. The industry believes that India needs to revise its measures in terms of import duties. Earlier this year, the Cellular Electronics Association of India said in a report that India has one of the highest tariffs on smartphone components. India's Most Favored Nation (MFN) tariff is on average 8.5%, higher than China's 3.7%.
Typically, high import duties are imposed to favor domestic industries, but experts say such high tax rates can reduce companies' investments when local industries do not exist, as was the case for Indian component manufacturers. It is argued that this will be a deterrent. Country. An IT ministry official said the government is aware of these concerns and the ministry is working with the Commerce Ministry to reduce or eliminate tariff rates on some components.
“Globally, it is easy to bring in parts because there are two to four tax rates, but in India the numbers are much higher. We have made it so that companies don’t have to worry about classification. We are moving towards harmonization. The reason why countries raise tariffs during periods of growth is because they want to develop their own companies. But the problem is that if they want to attract more suppliers to India, they need higher taxes. It means we need the right mix of low tax rates,” the official said.