After months of regulatory struggles, Apple is finally gearing up to begin production of its renowned iPhone in India. It’s all set to start assembling its smartphones but plans to flag off with iPhone SE. Initially, the company will be assembling around 3 to 4 lakh units of iPhone SE at its plant located in Karnataka.
The manufacturing plant is being set up by its contract manufacturer Wistron. This news comes at a time when the global smartphone market’s growth has been declining. The process of assembling iPhones in India is likely to start in April this year.
Till now, Apple was waiting for the Indian government’s nod for the tax concession request along with few other benefits. However, it seems that the company is now going ahead without the government’s green signal for the proposed benefits. As per a person aware of the matter, the company wants to experience manufacturing in India, ahead of officially starting it.
A senior government official said to Economic Times:
It is Apple’s first such venture in India…The demands they have made are for the larger plans of the company to really scale up manufacturing in India.
India is one of the largest smartphone markets in the world, and what is stopping Apple from getting a bigger chunk of this market is the price point. While most the devices in India are in the budget segment, usually under Rs. 15,000, the new models of iPhone start at over Rs. 50,000.
This was also a primary reason for Apple falling short of its target to sell 10 million mobile phones in the Indian market during 2016-2017. However, the company hopes that manufacturing iPhones in India will help the company price its phones competitively in the market, and enable it to get a bigger market share.
The iPhone SE, which was launched in April 2016, was anticipated to be aimed at emerging markets, including India, as it was priced lower than all other iPhone models. But even the lower price tag of Rs 39,000 for a basic model of SE was too high for capturing the mass market. Currently, it is retailing for less than Rs. 30,000 in India. The price will go down further once the company starts manufacturing it in India.
If Apple’s experiment of manufacturing iPhones in India goes as per expectations, India could become an important hub for the company. As per persons aware of Apple’s plans, the company is even open to relocating some of their manufacturing units from China to India due to rising labor costs in that country.
Last month, Apple indicated to the government that it is ready with a blueprint to begin manufacturing iPhones in India. However, the company asked for fiscal concessions, including Customs duty waiver on the import of components. Besides that, the company also wants relaxation in the mandated 30 per cent local sourcing of components.
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