After ending the last financial year with an unexpected fall in its growth rate, Apple India seems to be on a mission to turn things around, especially when it comes to the iPhone in India. It started with an unimaginable 30% discount on the iPhone XR and now, we’ve got an announcement of a major boost in the scale of iPhone assembly in the country.
Foxconn Technology Group Chairman Terry Gou confirmed that the latest iPhone series will go into mass production in India this year. It is considered a significant shift for the largest assembler of Apple products that have long concentrated production in China. This announcement has come only a few days after Wistron has begun the production process for the iPhone 7 model in India.
The Reasons for the Shift
India has become the fastest-growing smartphone market, and Foxconn is making a calculated move to be in the middle of the action. For several years now, the older iPhone models (iPhone SE and iPhone 6S) have been assembled at a plant in Bangalore. But now Foxconn will expand its manufacturing operations in the country to include the latest handsets too. Starting this month, Foxconn is ready to run the trial production of the newest iPhone. And soon the full-scale assembly will begin at its factory outside the southern city of Chennai.
Apple is losing business to local competitors like Huawei Technologies Co. and Xiaomi Corp, and one of the prime reasons is the high prices of iPhone models. Although local manufacturing doesn’t guarantee a reduction in costs, it can surely facilitate it as with local production, Apple India will be able to avoid import duties of 20%
Also, For Foxconn, the China market for iPhones is saturated, and labour costs are three times higher compared to India. Also, with the emerging smartphone market across Asia, India can serve as an export hub for the region.
With Apple’s growing attention to India, It’s not yet clear how the step will affect its China operations. After all, China has been the company’s most important manufacturing base for years. It is the home to Foxconn’s biggest facilities and hundreds of other partners. The intention to shift the focus away from China is there for everyone to see.
Past, Present and Future
In India, Foxconn already has two assembly sites in Southern states of Andhra Pradesh and Tamil Nadu. Here the company makes devices for Xiaomi and Nokia. Locating more manufacturing sites in India means Foxconn is moving its footprint away from China. This could be deduced as a step to avoid ongoing trade tension between China and the U.S.
By the time Apple announces the new iPhone in September, Foxconn’s Indian assembly line would serve the local and export market. The Taiwanese manufacturer Initially invests will about $300 million to set up for Apple. The investment is likely to ramp up as capacity expands.
As per Foxconn’s plan in India, the company is in talking terms with the government. Currently, the company has a dozen software developers in India and plans to increase the headcount up to 600. Producing locally in India will help to increase the reach into the India market. However, Tim Cook and the team still need to meet 30% local sourcing rule to open its own retail store in the country. If and when that happens, it will be another major landmark in Apple’s growth in India.