Apple will start making iPhones in India by April

The logo of Apple is seen at a store in Zurich. Photograph:( WION )

WION New Delhi, Delhi, India Feb 03, 2017, 11.23 AM (IST)

Apple is all set to start making iPhones in India this year, a local government official said on Friday, as the firm looks to tap a booming middle class as sales in China slow.

The US giant has not confirmed the move, but chief executive Tim Cook said this week the company intended to "invest significantly" in India, where a pick-up in the economy provides ample opportunity for growth.

"We have an understanding with Apple and we expect them to start manufacturing in Karnataka by the end of April," Priyank Kharge, minister of information technology and biotechnology in southern Karnataka state, told AFP.

He also added, "Apple's intentions to manufacture in Bengaluru will foster cutting edge technology eco system and supply chain development in the state, which are critical for India to compete globally."

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He said the new operation would likely assemble iPhones for the domestic market.

Apple has only a two per cent share of the Indian market, well behind rival Samsung on 23 per cent, according to research firm Canalys.

However, last year it had 48 per cent of the premium sector in which phones sell for $450 and above.

Experts said manufacturing locally would reduce the company's costs and enable it to lower prices.

"They’re eager to be here because they've identified India as a strategic focus market," said Jaideep Mehta of research firm IDC.

"They had a fantastic 2016 in India and shipped more two million devices to India, and now they’re looking to ultimately manufacture here as that gives them more flexibility to respond to market changes."

Apple currently sells its phones in India through third-party retailers. It is eager to open its own stores but Indian law would require it to procure 30 per cent of the components of its products locally.

It is not clear whether the Karnataka plans would help it clear that hurdle. Reports in Indian media said Wistron Corp, a Taiwanese electronics manufacturer, was lined up to assemble iPhones at a plant on the outskirts of tech hub Bangalore.

Apple outsources all its manufacturing globally. Analysts said that if confirmed the move would be a coup for India's government, which has been trying to persuade foreign companies to manufacture in the country.

Apple representatives met with federal and state government officials in India last week, as it is lobbying hard for a raft of tax and sourcing concessions from India, before it begins to assemble iPhones in the country.

Following the meetings, Apple said it appreciated the open and constructive dialogue it held with Indian officials, around the expansion of its local operations in the country.

Any final decision around manufacturing in India, however, is likely to still be contingent on the government's willingness to concede ground on the concessions sought by the company.

(WION with inouts from Agencies)