Apple Said to Lobby for India Incentives as It Plans iPad Assembly

Apple is angling to participate in a new scheme to boost India's exports of computer products, part of what government and industry sources say are plans to bring iPad tablet manufacturing to the South Asian country.

India launched a $6.7 billion (roughly Rs. 48,690 crores) plan to boost smartphone exports last year, as Prime Minister Narendra Modi stepped up efforts to promote electronics manufacturing and create jobs.

Apple, which has steadily raised production of iPhone devices in India to lessen its dependence on Chinese manufacturing, took part in that scheme via its contract manufacturers.

Now the government is preparing to unveil another incentive to drive local manufacturing of IT products including tablets, laptops, and servers, three sources closely involved in the drafting of the plan told Reuters.

The new performance-linked incentive (PLI) scheme, which offers cash-back to manufacturers for exports, will have a budget of up to Rs. 7,000 crores over five years, the sources said. It's expected to be launched by the end of February.

Apple, along with others, is lobbying for a bigger budgetary outlay of Rs. 20,000 crores before that plan is finalised, as India doesn't yet have the scale or the supply chain for making IT products and competes with duty-free imports of tech products, two of the sources said.

Apple's push comes at a time its iPhone supplier Wistron is just restarting operations at a southern Indian plant after angry workers went on a rampage last year. Apple is yet to take the Taiwan manufacturer off of probation.

Apple declined to comment for this story.

New Delhi is also planning another PLI, at a budget of roughly Rs. 50,000 crores over five years, to boost domestic manufacturing of wearable devices such as smartwatches, the sources said, adding the plan could be announced within two months.

All the sources declined to be named as the plans are not public.

India-made iPad

Apple assembles a bulk of its iPad gadgets in China, but is fast diversifying production to markets such as India and Vietnam to minimise the impact of the US-China trade war and the coronavirus crisis.

Its top supplier Foxconn is building assembly lines for iPad models and MacBook laptops in Vietnam, Reuters reported late last year. Other iPad assemblers include Taiwan's Compal Electronics and China's BYD Electronic International.

In India, Apple will likely have iPad's assembled by one of its existing suppliers in the country as early as this year, two of the sources said, though its plans could get delayed as India makes the entry of BYD difficult amid its wariness to give new tech business to Chinese companies.

"The government is asking Apple to get iPads assembled by its contract manufacturers here, the non-Chinese companies" one of the sources, a government official said.

It was not immediately clear which of Apple's three contractors in India - Foxconn, Wistron, and Pegatron - would assemble iPad models.

Pegatron and Wistron did not respond to requests for comment while Foxconn said it does not comment on specific operations or work for a customer.

India's IT ministry also did not respond to a request for comment.

India last year banned more than 200 Chinese-origin mobile applications, saying they threatened the security of the country. It also announced new controls on telecoms gear purchases.

Cupertino, California-based Apple began the assembly of iPhone devices in India in 2017 and has since ramped up manufacturing operations via the local units of Foxconn and Wistron. Pegatron also set up a base in India last year.

Foxconn will invest up to $1 billion (roughly Rs. 7,270 crores) to expand a factory in southern India where the Taiwanese contract manufacturer assembles iPhone devices, Reuters reported previously.

The three Apple suppliers have also committed roughly $900 million (roughly Rs. 6,540 crores) over five years to make iPhone gadgets in India.
© Thomson Reuters 2021

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