iPhone production: India offers a homemade road map to Apple

Over the last few years, Apple has increased its focus towards the Indian market

India has offered its own electronics manufacturing road map to global tech giant Apple to comply with as it kick-starts local production of its flagship product iPhone and carve up a larger chunk of the country’s fast-growing smartphone market.

“We have drawn a road map of indigenisation, in consultation with the industry over the past two years. We have shared it (with Apple) and asked them to align with it… we don’t need to give them any separate concessions. Apple said they will examine this and get back,” said Aruna Sundararajan, secretary to the Ministry of Electronics and Information Technology.

Apple did not comment. It had requested the government to grant it 15 years of duty-free import of components to assemble its iPhones in the country, sharing a road map to slowly indigenise products. 

The government has instead chalked out its own National Policy on Electronics to achieve its goal of a $400-billion market in the sector by 2020.

Earlier this month, the Cupertino-headquartered firm conducted a trial run for producing its low-cost iPhone SE at Taiwanese contract manufacturer Wistron’s facility in Bengaluru. Apple in a statement said its “Made in India” iPhones would hit store shelves in late May.

“They have big plans for India and they definitely intend, as they have told us, to make all their products in the next phase, for which they are evaluating various options. The first thing they had requested was 15 years of duty-free imports of their components,” said Sundararajan.

India has maintained that it would not offer any concessions specifically to Apple produce smartphones locally, but would instead come up with concessions that would benefit all smartphone makers looking to set up manufacturing operations in the country. It also rejected Apple’s request to set up local plants to refurbish used iPhones, which it intended to offer to local customers at lower prices.

As it looks to expand its share beyond the 2-3 per cent in India’s 100-million smartphone market, Apple is looking at localisation of production in order to compete with Chinese rivals such as Xiaomi, Oppo and Vivo, apart from its primary rival Samsung. Currently, Apple sells four-year-old models such as the iPhone 5S to compete in India’s mid-level smartphone segment.

“We continue to strengthen our local presence across the entire ecosystem, and we’re very optimistic about our future in this remarkable country with its very large, young, and tech-savvy population, a fast-growing economy, and improving 4G network infrastructure,” Tim Cook told investors during Apple’s most recent quarterly earnings call.

The firm is looking at India as its next big market, at a time when iPhone sales have begun dropping in its two largest markets — the US and China.