Making iPhone 14 in India | The Financial Express

Making iPhone 14 in India

Good opportunity, but there is high dependence on component imports

Making iPhone 14 in India
Foxconn has already started shipping the iPhone 14 (last Friday), and the larger iPhone 14 Plus will be shipped by Pegatron and Wistron in end-October, according to Financial Times.

Apple rolling out its ‘Made in India’ iPhone 14 less than a month after it was globally launched is definitely a feather in the cap of the government’s production-linked incentive (PLI) scheme to encourage local production and exports of mobile phones. While this scheme sought to kick-start domestic manufacturing, it was also intended to incentivise foreign companies to de-risk their exposure to the dragon at a time of disrupted supply chains due to Covid-19 and worsening US-China tensions. Although Apple still depends heavily on suppliers in the Chinese mainland for its best-selling products—its 2021 supplier list shows that it accounts for 156 out of its 615 production facilities—it is shifting some of its production to countries like India. The iPhone 14 will be assembled by its preferred Taiwanese contract manufacturer, Foxconn, from its facility on the outskirts of Chennai. Its other two preferred contract manufacturers are also Taiwanese, Pegatron and Wistron, which have production bases in Tamil Nadu and Karnataka, respectively. All these companies are availing of the PLI scheme, and since 2017, they have assembled the iPhone SE, iPhone 12, iPhone 13, and, now, the iPhone 14. Foxconn has already started shipping the iPhone 14 (last Friday), and the larger iPhone 14 Plus will be shipped by Pegatron and Wistron in end-October, according to Financial Times.

Also Read: No auctioning satellite spectrum

While there are enormous opportunities with Apple deepening its footprint in India, there are also formidable challenges such as the high dependence on imports of components. China is a far bigger player than Apple in the country’s smartphone market, and all these players assemble their products here with imported parts, worsening India’s trade deficit. It is true that exports of mobile phones have gone up since the PLI scheme kicked in since 2019, but so too have imports.

Till July this fiscal, the country’s deficit from trade in telephones, cellular phones and related equipment stood at $1.6 billion. In FY 21, this was $6.9 billion. While faster growth in exports will narrow this imbalance, a far better outcome will be to build a component base so that more domestic value-addition takes place. The grounds for optimism in this regard is the big bet that the steel-to-software Tata Group is making in electronics, including manufacturing components for iPhones at a facility near Hosur in Tamil Nadu. This facility is expected to be fully operational in four months’ time. The Tatas also have a joint venture with Wistron, all of which augurs well for the country’s ambitions of becoming a part of the iPhone supply chain.

With Apple expected to shift 5% of its iPhone 14 production to India from late 2022, according to JP Morgan, there is warrant to dampen expectations that India will turn out one out of four iPhones globally, or that one out of four Apple devices produced outside China by 2025 will be made in India. For India to be an automatic choice in this regard, it will have to be more competitive vis-a-vis Asian rivals with a manufacturing ecosystem, better infrastructure, and land and labour reforms. Some foreign companies that opted to move out of China have preferred fast-growing Vietnam, which has steadily built up its competitiveness over the last 15 years. Most foreign investors like Apple are also in no tearing hurry to move out of China as yet. But, the locally-assembled iPhone 14 in India is definitely good news.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos
11 Photos
‘The festival of democracy’ – Modi votes in Gujarat 2nd phase! See PHOTOS
11 Photos
Gujarat Assembly Election 2022: The Festival of Democracy – In PICS
8 Photos
Mumbai Attack 26/11: Tributes paid to martyrs on 14th anniversary of terror attacks that shook the nation