Apple executives have targeted both India and China as developing regions to drive revenue growth in the coming years, primarily through iPhone sales. However, India has stringent regulations on foreign device sales and requires that 30% of the components in the devices must be sourced domestically. Apple currently cannot meet this requirement as the vast majority of parts and all assembly happens in China. As such, Apple is looking to setup a new manufacturing plant in India that will make iPhones and iPads, thereby complying with the law and enabling iPhone to join the Indian smartphone market en masse.
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Via the India Times, Apple is seeking incentives from Indian government to reduce the financial burden of setting up a whole new plant. India offers large organizations financial incentives to invest in local electronics manufacturing; Apple is looking to take advantage of this. The government body managing the application says that “due diligence” is underway.
Apple has attempted Indian iPhone sales from multiple angles. It tried to arrange a special exception to the 30% local manufacturing rule earlier this year, claiming iPhones were too technologically advanced for local sourcing to be possible. This request was refused.
Apple also attempted to get the government’s permission to resell used iPhones in India, allowing Apple to enter the market at lower price points, but this was also blocked and denied. India saw the attempt as a quick way to ‘dump’ reject devices in their country. At the moment, the company must resort to selling limited quantities of its phones through Indian resellers — severely limiting the market potential.
Ever since, rumors of Foxconn and Apple teaming up for an Indian manufacturing plant have been swirling. Local manufacturing will allow Apple to comply with the 30% domestic components rule and may also help margins in a market where prices are likely to be squeezed. The average cost of a smartphone in India is $150 — several hundred dollars cheaper than the newest iPhones. The government response today confirms that these plans are in motion but a projected timeline is not clear.