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Apple Inc. will soon start assembling iPhones in India for the first time, say government officials familiar with its plans, boosting the company's chances of gaining a foothold in the fast-growing market.
Taiwanese contract manufacturer Wistron Corp. will likely start making iPhone 6 and 6S models here in the next four-to-six weeks at its plant in Bangalore, said an official of the southern state of Karnataka where the tech hub is located. It will add Apple's cheapest iPhone model, the SE, to its assembly line in about three months, the official said.
"Almost all preparations have been done for launching Apple's first phase project in Bangalore through Wistron," the official told The Wall Street Journal.
"We've been working hard to develop our operations in India," an Apple spokeswoman said. "We appreciate the constructive and open dialogue we've had with government about further expanding our local operations." A Wistron spokeswoman said the company doesn't comment on "rumor or speculation."
With sales cooling in China, long an engine for Apple's growth, manufacturing iPhones locally would help Apple address what analysts say is its biggest problem in India: its smartphones are simply too expensive for the vast majority of people.
Smartphone shipments in India grew 18% last year, compared with 3% globally, according to Counterpoint Research, but the majority of phones sold here cost less than $150.
The iPhone SE, which some online retailers now sell for as low as $330, is still out of reach of most Indian consumers.
"Apple realizes that the phones are priced way too high for the Indian market," said Kiranjeet Kaur, an analyst at research firm IDC.
Making the phones in India would allow Apple to lower prices by at least $100 as its import tariff bill comes down, said Faisal Kawoosa, an analyst at research firm CMR.
Apple is also negotiating with New Delhi for its next level of production in India. It wants to bring its component manufacturers to India to make parts and export finished phones, said the state official as well as a senior federal government official at the Trade Ministry.
Apple had sought tax concessions on the import of key components but the Indian government hasn't yet "accepted most of the demands of the iPhone manufacturer," Trade Minister Nirmala Sitharaman told lawmakers in a written submission to Parliament on Wednesday.
"Apple is closely working with [the] government to move forward with its India plans. We want Apple to manufacture in India. They are also very keen," an official who works closely with Prime Minister Narendra Modi said, declining to be named. "We will try to accommodate as much of their demands as possible, but they too appreciate and understand our limitations."
The Cupertino, Calif., company has been looking for new ways to build its brand in the South Asian nation, where it has less than a 5% share of the smartphone market.
Apple Chief Executive Tim Cook in a call with analysts last month said the company is also "in discussions" to open retail stores in India, and that Apple intends to "invest significantly in the country and believe it's a great place to be."
Source: The Wall Street Journal
