Apple’s Bengaluru iPhone Unit Launch Hinges on Govt Sops
Bengaluru: A formal deal between Apple Inc and a potential manufacturing partner for starting production of iPhones in Bengaluru will come through only if the technology giant manages to negotiate sops for its India investments from the Union government.
“Apple Inc will not come on board immediately until it completes the ongoing negotiations with the government of India,” said a top government official aware of the developments, declining to be identified. It is not clear yet as to where the negotiations stand now.
The Cupertino, California-based company has been seeking sourcing and tax concessions before it can begin manufacturing in India through a partner. Apple’s market share in India is smaller than 5% and local manufacturing will allow it to open its own stores in one of the world’s fastest-growing smartphone markets as sales in China decelerate.
Karnataka’s information technology department in a statement on Thursday signaled that the iPhone maker had decided to begin production in Bengaluru. State IT Minister Priyank Kharge said Taiwanese company Wistron Corp would manufacture the smartphones for Apple in the city.
Wistron, through an Indian arm, has a facility at Peenya industrial suburb near Bengaluru, and is briskly ramping up its manufacturing capacity in anticipation of an early deal from Apple. The Taiwanese firm was making the investments following a green signal from the iPhone maker, the government official quoted above said.
While Wistron will initially focus on assembling iPhones, the game-changer for Apple in India will happen when the manufacturer progresses to the next phase that relates to sourcing components locally.
India requires foreign brands keen to open their own stores in the country to source one-third of their components locally for a certain period. The government modified as well as relaxed the norms last year but some requirements have re- mained contentious for Apple. The second phase of Wistron’s iPhone manufacturing, according to government officials, is critical because it will not only help Indian component makers but also enable Apple to export the smartphones from Bengaluru to overseas markets.
According to reports, Apple sold 2.5 million iPhone units in 2016 in India. Alocal manufacturing unit could boost its India sales due to the price advantage on account of savings on custom duty and other levies.
Kharge said Karnataka was willing to facilitate any high-end manufacturing in the state, including that of iPhone. “We are open to provide necessary incentives and concessions if the investments are substantial,” he said. Apple has not made any official application with Karnataka because it is known to work through thirdparty manufacturers. The government is bullish that manufacturing of iPhones will begin in Bengaluru in the next couple of months. Karnataka may also grant some sops, and the investors are studying the fine print of the State’s electronic system design and manufacturing policy.
“Wistron is in the process of expanding its (Bengaluru) facility through its Indian arm. We are supporting them in terms of faster statutory clearances for additional power sanction, and fire certification,” said Gaurav Gupta, Karnataka’s Commissioner for Industries. ET could not immediately reach Apple and Wistron for a comment.
Karnataka, which got 13th place in the ease-of-doing-business survey last year, is leaving no stone unturned to make the Apple project a reality both for its snob value as well as to silence criticism that Bengaluru is crumbling due to its traffic and infrastructure problems.