The Plan To Make Apple India’s Largest Exporter
Apple could move a number of its production facilities away from China in favour of India as it looks to scale up its manufacturing which could see up to 20% of its production move.
A report from The Economic Times claims that senior executives at Apple have met with high ranking Indian officials, which could eventuate in $40 billion of manufacturing coming from India in the next five years. The report came after publicised talks between government and Apple officials, as well as the recently unveiled PLI scheme that encourages investment and production in India.
That report cites a senior government official saying that “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 scheme.”
The plan, if it comes to fruition, would make Apple India’s single largest exporter, at a time where manufacturers are looking to diversify their manufacturing portfolio away from China; currently Apple directly and indirectly employs 4.5 million people in China.
Under the product-linked incentive (PLI) scheme, a company is able to capitalise on 4-6% incentives on incremental sales - over base year - of goods manufactured in India for a total of five years if they produce more than $10 billion worth, according to the Ministry of Electronics & Information Technology.
India’s Prime Minister, Narendra Modi has met with top executives at Apple and Samsung at the conclusion of 2019, as well as local smartphone manufacturers to encourage more local investments in technological production.
The government official continued to explain that “India isn’t a big market for Apple as the company sells only a fraction of its total output in India. It is actually looking at India as a base to manufacture and export, essentially diversifying its production out of China.”
As it stands, Apple sells around $1.5 billion worth of products in India, and of that, less than half a billion’s worth is locally manufactured. In China, however, Apple manufactured $220 billion worth of products between 2018-19.
Japan has announced that it will move more than $2.2 billion worth of production out of China, and the US is expected to follow suit in the coming months. Another unnamed government official told The Economic Times that the government was “expecting companies to start applying from next week, when the guidelines are out and then the scheme kicks in from August 1. This is the fastest ever planning to execution undertaken by the Indian government.”
They continued to explain that “with such incentives, we expect mobile phone exports out of India to cross $100 billion by 2025,” adding that “it could be earlier than that.” India’s smartphone exports totaled just $3 billion for 2019-20.
According to data from market research company IDC, Apple commands a 38% share of the smartphone market while Samsung has a 22% share.