India has held several High-Level meetings with Apple to possibly shift up to 20% of its iPhone Production out of China by 2025
Several meetings between Apple’s senior executives and top ranking government officials over the last few months have paved the way for Apple to examine the possibility of shifting nearly a fifth of its production capacity from China to India and scaling up its local manufacturing revenues, through its contract manufacturers, to around $40 billion over the next five years, say officials familiar with the matter. If this happens, Apple could become India’s largest exporter, say experts.
It may have been during one of those meeting that Apple was given the green light to open their first Flagship store in India. Apple's CEO made the announcement during their annual shareholders meeting in late February.
A senior government official told India's Economic Times (ET): "We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, availing the benefits under the production-linked incentive (PLI) scheme."
Although sources close to the matter state that there are some clauses that have to be ironed out before Apple could bite, but government officials were confident that most concerns would be seriously reviewed. Prime Minister Narendra Modi met with top Apple and Samsung executives in late December to kick start the new program.
One government official stated that Apple is looking at India as a potential base to manufacture and export, a means of diversifying its production out of China.
The Production-Linked Incentive (PLI) scheme had been designed to address disadvantages global supply chains faced in India vis-à-vis say China and Vietnam.
The government official added that "we are expecting companies to start applying from next week, when the guidelines are out and then the scheme kicks in from August 1. A second official added that "This is the fastest ever planning to execution undertaken by the Indian government."
The PLI scheme for large-scale electronics manufacturing was notified on April 1 and offers a production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging units.
The official expects applications from Apple’s component and contract manufacturers, Samsung and a clutch of Chinese investors such as Vivo and Oppo in the next few weeks for the PLI scheme.
The government is hopeful that the new incentives program that mobile phone exports out of India could cross the $100 billion market by 2025. Critics of the plan, such as Research Agency TechArc, believe the country just doesn't have a strong ecosystem in place starting with skilled workers and support structures. For more details, read the full ET report.
The timing is interesting considering that President Trump and Modi held major meetings in late February in India. India signed a $3 billion military deal for state-of-the-art military helicopters. It's unknown at this time if Trump was encouraging India to attract more U.S. companies to move production plants out of China as tensions between the U.S. and China heighten.