After successfully wooing Apple with favorable tax deals for the establishment of iPhone production, India has its eyes set on the tech giant’s iPad and MacBook business.
Bloomberg reports that India has launched a $2 billion financial incentive plan to attract laptops, tablets, and other hardware manufacturers like Apple who are looking to diversify their supply chain outside China.
Political tensions between Washington and Beijing and the country’s zero-COVID-19 policies forced Apple to look beyond China and diversify its supply chain in other favorable South Asian regions like Malaysia, Vietnam, and India. Benefitting from the decision, India accounts for 7% of global iPhone output.
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Apple’s new tax deal in India paves the way for iPad production
As part of its $2 billion plan to increase local production of tablets, laptops, and other tech-related hardware, the Indian government by providing up to 4% cash-backs of additional sales of locally manufactured products.
India on Wednesday approved a 73.5 billion rupee ($1.02 billion) of its 170 billion rupee ($2 billion) financial incentive plan to boost local manufacturing and exports of IT products such as laptops, tablets, personal computers and servers.
It provides manufacturers cash-backs of between 1% and 4% of additional sales of locally made goods over four years, with 2019-2020 as the base year.
The latest efforts are driven by Apple’s early success in India. The report states:
Prime Minister Narendra Modi is capitalizing on the early success of Apple Inc.’s local assembly operations — which have helped the US company produce about 7% of its global iPhone output — to pitch the country as a viable global manufacturing hub. New Delhi wants to bring more tech production to India after China’s trade war with the US and its strict Covid policies prompted companies to weigh other options.
India market has “unbelievable” dynamism and vibrancy said Apple CEO Tim Cook
May 5, 2023: Apple reported revenue of $94.5 billion in Q2, 2023 and iPhone sales accounted for $51.3 billion setting a March quarter record. The tech company’s CEO Tim Cook accredited iPhone’s impressive performance to strong demand in emerging markets like India, Brazil, Mexico, and others.
At the Q2, 2023 earnings call, Tim Cook detailed that the company’s business in India set a quarterly record with double digits Y-o-Y growth.
Quoting the company’s latest business ventures in India, Erik Woodring from Morgan Stanley asked Cook why was India an important market and the monetization trends in the country.
Cook said the company had a good March quarter in the country as it was an “incredibly exciting market” and Apple’s major focus because a lot of people were entering the middle class with enthusiasm for the brand.
Looking at the business in India, we did set a quarterly record, grew very strong, double digits year-over-year. So it was quite a good quarter for us, taking a step back, India is an incredibly exciting market. It’s a major focus for us. I was just there, and the Dynamism in the market, the vibrancy is unbelievable. Over time, we’ve been expanding our operations there to serve more customers, and three years ago, we launched the Apple Store online, and then, as you just mentioned, we launched two stores just a few weeks ago, and they’re off to a great start, one in Mumbai and one in Delhi.
We’ve got a number of channel partners in the country as well that we’re partnering with, and we’re very happy with how that’s going overall. Overall, I couldn’t be more delighted and excited by the enthusiasm I’m seeing for the brand there. There are a lot of people coming into the middle class, and I really feel that India is at a tipping point, and it’s great to be there.
Wistron to exit India in 2024, after Tata Electronics take over is complete
May 2, 2023: One of the three Apple iPhone manufacturers in India, Wistron is shutting down its business in India for good. The Taiwanese electronics company has sold its iPhone facilities in Karnataka to the local business group, Tata Electronics which assembles iPhone 14, iPhone 12, and iPhone SE models.
Wistron began iPhone production at its Narasapura facility in August 2020, its third plant in Karnataka. However, the manufacturer faced a violent riot at the plant over unpaid salaries and wage reductions in December 2020. Workers vandalized the property and set cars on fire. Apple put Wistron on probation after it was found guilty of labor exploitation until the issues were resolved.
It was speculated that the riot and probation cost Wistron millions of dollars in damages and pushed back its iPhone production plans; “The Apple probation will delay Wistron’s smartphone production and hurt its manufacturing push in India where it had committed to invest some 13 billion rupees ($177 million) over the next five years as part of New Delhi’s production-linked incentive plan for smartphone manufacturing.”
Without giving reasons for the withdrawal from India, Business Today reports that Tata Electronic is in the process of taking over Wistron’s iPhone factories in Karnataka which made the largest share of its business in India.
Once, the takeover is complete, Wistron would likely approach the Indian National Company Law Tribunal and the Registrar of Companies to dissolve its operation in the country in 2024. However, the company will continue to offer its services business for the repair and maintenance of Apple products in India.
The Taiwanese manufacturer plans for the Internet of Things and expansion production in the EV production sector.
Previously, it was reported that if Tata Electronics and Wistron deals come through, then Tata might venture into the production of iPhone 15 models expected to launch in September this year, along with Foxconn and Pegatron in India.
Indian minister sets eyes on up to 3x increase in Apple’s investment in the region
April 20, 2023: The opening of Apple Stores in India has convinced the country’s officials that the tech giant has long-term plans in the region. After CEO Tim Cook’s visit to India, the country’s deputy minister for information technology, Rajeev Chandrasekhar expressed strong confidence in Apple increasing its investment in the region up to 3x in the coming years.
Reuters reports that the minister also expects the company to increase exports.
Its iPhones made up more than half of total smartphones worth about $9 billion exported from India between April 2022 and February, data from the India Cellular and Electronics Association shows.
“I am very confident that this Apple-India partnership has a lot of headroom for investments, growth, exports and jobs – doubling and tripling over coming years,” Rajeev Chandrasekhar, the deputy minister for information technology, told Reuters.
Apple Stores finally open in India, CEO Tim Cook welcomed the excited customers
April 20, 2023: After years of delay due to the COVID-19 pandemic, the Cupertino tech giant has finally opened its first two retail stores in India: Apple Saket opened in New Dehli on April 20 and Apple BKC opened in Mumbai on April 18.
CEO Tim Cook and Deirdre O’Brien were personally present at the inauguration of both sites to greet the excited customers.
Both stores have the same iconic Apple architecture with all-glass storefronts, wooden interiors, high ceilings, video walls, and pickup counters. All products are on display for customers to try and test before making a purchase.