Apple plans to scale up domestic component manufacturing in India

The move is likely a part of Apple's diversification process of its supply chains beyond China. A major chunk of Apple's suppliers are based out of China in its supply chain. Geopolitical scenarios, government policies and company direction may be prompting it to diversify to other countries.

The company, so far, relied on contract manufacturers such as Foxconn, Wistron, and Pegatron for the local production of iPhone units. Their ecosystem of component suppliers includes names such as Foxlink, Flex, Salcomp, Avary, Sunwoda and Jabil, which help in the manufacture of iPhones.

The US company makes almost 7 percent of its iPhones in India through expanding partners.

Last month, Apple India MD Virat Bhatia met senior officials from the Finance Ministry and made a presentation on its current manufacturing, supply chains, exports and the company’s participation in India’s electronics sector.

“There was a meeting in July in which Apple made a presentation. They wanted the government to know of its plans. They are interested in increasing their domestic component base, they are actively looking at it. The meeting focussed on better understanding of supply chain and greater indigenisation. The overall growth of the smartphone manufacturing industry was also reviewed,” the official said.

The meeting came at a time when Apple is betting on India to become a key manufacturing hub in order to diversify its manufacturing capabilities beyond China.

Apple began manufacturing iPhone in India in 2017, and since then, the company has worked with suppliers to assemble iPhone models and produce a growing number of components. The iPhone maker on April 18, 2023, opened its first store in Mumbai and the second one in New Delhi on April 20, 2023.

Apple clocked iPhone exports of about $5 billion-$5.5 billion from India in FY23, accounting for nearly half of the country's mobile phone exports, according to estimates from industry sources.

Apple is also currently the leader in India's premium smartphone market (above Rs 30,000) and the country's smartphone market in terms of shipment value in Q4 2022, according to a report by Counterpoint Research. It clocked record shipments of over 6.5 million in 2022, registering a 16 percent growth YoY, the firm noted. The company's overall market share in India's smartphone market is, however, still around 5 percent.

Overall smartphone manufacturing has got a boost from the government’s production-linked incentive scheme. Under the scheme, the government estimates a total incremental production of Rs 10.05 lakh crore, exports of well over Rs 6.5 lakh crore and direct and indirect jobs of up to at least 8 lakh, maybe more by 2026.

The email inviting Apple’s comments remained unanswered till the time of publication of the article