Apple Inc. is in dialog with India’s government to explore the potential of manufacturing products locally reported the Wall Street Journal. Cupertino company not only outlined its manufacturing plans in India but also sought financial incentives in a letter to the government. Cupertino is a California based firm which has been trying to push the sales by introducing easy finance options, buyback scheme and selling refurbished iPhones.
Apple which reported its first annual revenue decline since 2001 in October, had voiced a great hope for sales in China and India. The CEO Tim Cook in quarterly earnings call, held that the iPhone sales in India were up by 50 percent in FY 2016 compared to the previous year. Cook turned towards India after being bullish on China especially with tough competition from Huawei. The CEO acknowledge that there is immense opportunity with the middle class population in India which can be measured as the first tipoff.
Apple has been facing tough time with its manufacturing companies in keeping up with quality. The world’s largest democracy has a policy which entails that any company will have to purchase a minimum of 30 percent of manufacturing materials from local vendors after a period of three years. Consequently, with this move of setting up a manufacturing plant, Apple will be able to bypass the local sourcing norms and open its stores in India.
India has attracted investment from 37 mobile manufacturing companies in last one year. The country which imports electronic goods of over three lakh crore rupees, aims to bring down these imports to zero by 2020. The bottleneck for Apple is the premium prices due to heavy import duties, which reduced the total addressable market in India. Local manufacturing will give Apple a free hand with the policies and could go a long way in boosting the company’s India prospect.
Neither the government officials nor Apple executives have issued any statement regarding the manufacturing plans. Foxconn which is Apple’s main assembly partner, had negotiations a while back to setup Apple-focused factory in India but no deal was signed.
Earlier this year, Apple launched a technology center in Hyderabad, focused on Apple Maps development. It also the company leased 40,000 square feet in Bengaluru for a planned design and development accelerator. These moves did not have any impact on the sales while the manufacturing plant will have significant result.
