The US-based tech giant is expanding its presence in the country to diversify its supply chain and reduce its reliance on China. It is reportedly working with its suppliers to build more than 50 million iPhones in India annually within the next two to three years. Additional tens of millions of units are planned to be produced after that.
If these plans materialize, India will become one of the world’s top three smartphone production hubs. This would majorly boost the country’s manufacturing industry and provide job opportunities to hundreds of thousands of skilled laborers. It will also help lower the cost of smartphones in the country, which are sold at exorbitant prices due to high import duties and taxes.
Apple’s suppliers, led by Taiwan’s Foxconn Technology Group, have already begun ramping up their production in India. The Indian government’s production-linked subsidies have incentivized them to invest more in the country. This helped Apple assemble over $7 billion worth of iPhones in India during the previous fiscal year, accounting for about 7% of the global total.
The company also started assembling non-Pro iPhone models in India last year. As a result, the company’s production in the country grew to over 1 lakh crore ($12.19 billion) this fiscal year, up from around Rs 60,000 crore (US$7.19 billion) in the first seven months, according to officials with knowledge of the matter.
The company will reportedly build a new factory in Karnataka to expand its presence in the country further. The new plant will be larger than the Wistron Corp. factory it recently acquired from India’s Tata Group and will employ 50,000 people across 20 assembly lines. It is expected to be operational in about 12 to 18 months.
This massive investment in the country’s manufacturing sector is part of Apple’s plan to localize its supply chain and support its goal of becoming a global electronics manufacturing powerhouse. The company is also investing in a new campus near Bangalore, which will house several research and development centers.
The iPhone is the most critical product for Apple, accounting for almost half of its revenue. However, the company has faced increasing competition from cheaper rivals such as Samsung, which has been able to attract customers with aggressive pricing strategies. The company’s efforts to expand production in India may help it retain its position as a premium smartphone maker. But it will need to cut costs further to compete with cheaper rivals in the future. This could be achieved through a combination of higher-efficiency design and production and by further leveraging the country’s low wages. The latter is crucial for the company as it expands its global footprint.