Apple’s Suppliers Eye To Invest $900 Million In India Smartphone Incentive Scheme

Three top suppliers of California-headquartered tech giant, Apple Inc. or Apple namely Foxconn Technology Group, Wistron Corp., and Pegatron Corp. have plans to invest nearly $900 million in the next five years in India’s scheme for boosting the local production of smartphones, according to sources familiar with the matter told Reuters. All these three electronic manufacturing companies are based in Taiwan and have been supplying their products with other smartphone companies across the globe.

Under a vision of India’s transformation into an export manufacturing hub, the Indian government recently announced a scheme offering cash incentives to those tech companies that help increase the sales of locally-made smartphones over the next five years. Foxconn, Wistron, and Pegatron have shown interest in the business operations in India’s new $6.65 billion production-linked incentive (PLI) scheme.

Investors Interest in India’s Smartphone Production

The sources explained that Foxconn has made its move to invest nearly about Rupees (Rs) 40 billion ($542 million), which was more than half of the total capital investment made by the three investors together. Wistron and Pegatron have committed to invest close to Rs 13 billion rupees and 12 billion respectively for the PLI plan, which is estimated to create about 10,000 jobs in India, as the sources stated.

Foxconn, which also assembles devices for Xiaomi in India, already has enough capacity to cater needs of the consumers preferring Xiaomi’s devices, but it is likely to use the PLI plan largely to boost the iPhone production, one source said. Wistron, which assembles roughly 200,000 second-generation iPhone SEs per month in India, plans to scale that up to 400,000 a month by the end of the year, the source added. Meanwhile, Wistron’s arm in India currently assembles only iPhones. Pegatron is yet to start Indian operations and has been in talks with several states, with Tamil Nadu in the south emerging as a frontrunner for a planned plant to manufacture Apple devices.

Manufacturing Apple Devices in India

As the sources described, the majority of the investment would focus on the expansion of the existing iPhone manufacturing in India, which would provide massive opportunities for Apple’s growth in the Asian region. Reuters stated that the investment plan could boost Apply’s expansion beyond China.

Tarun Pathak, an associate director at tech researcher Counterpoint, said, “India is key to Apple’s global ambitions as it expands beyond China.” Reflecting on the potential market in India, Pathak added, “It offers a strategic market to them where skilled labor is cheaper as compared to other manufacturing destinations, the size of the internal market is huge and the export potential is enormous.”

In 2017, Apple started a low-cost assembling of the iPhone model in India with the help of Wistron’s local unit in the tech hub of Bengaluru. The tech giant later increased its production rapidly after Foxconn began its service to assemble iPhones last year and the widening operations of Wistron. Last week, Apple launched its first company-run retail store or online store in the financial hub of Mumbai.