Apple vendor eyes production shift to India

Ruben Fields
August 2, 2020

The government notified production linked incentive scheme for large scale electronics manufacturing, the scheme for promotion of manufacturing of electronic components and semiconductors, and the modified electronics manufacturing clusters (EMC 2.0) scheme.

As many as 22 domestic and global firms, including iPhone maker Apple's contract manufacturers as well as Samsung, Lava, Dixon and so forth, have lined up with proposals for mobile phones production worth Rs 11 lakh crore over the next five years, Union Telecom and IT Minister Ravi Shankar Prasad said on Saturday.

Indian companies that have applied under the scheme include Lava, Dixon Technologies, Micromax and Padget Electronics. Out of these, five global players- Samsung, Foxconn - through two units, Wistron and Pegatron and five domestic players- Lava, Dixon, Micromax, Padget Electronics, Sojo and Optiemus will be aided by the government to develop their manufacturing ecosystem in India.

Apple assembles some smartphones, including the iPhone 11, at Foxconn and Wistron's plants in two southern Indian states. It is estimated this will result in $153 billion worth of smartphones and components during the entire five-year period the scheme will run for.

"A total of 22 companies have filed their application under the PLI Scheme. Apple (37%) and Samsung (22%) together account for almost 60% of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country", said Electronics Ministry in a statement.

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Meanwhile, around 8-10 companies have filed applications for component manufacturing which include motherboard maker AT&S, Ascent Circuits, Sahasra and Vitesco.

22 companies in the smartphone manufacturing field have submitted applications for the incentive scheme with Chinese makers under the BBK wing (Oppo, OnePlus, Realme, vivo) missing from the list. The expenditure on PLI scheme over five years is expected to be around Rs 41,000 crore, the government had then said.

This will lead to production worth Rs. 11.50 lakh crore in five years of which 60% will be exported, creating some 3 lakh direct employment and three times indirect employment, the government said in a statement.

"The benchmark for global companies was that they make mobile phones priced at or above Rs 15,000". Asked about the Chinese players and whether the firms were barred from applying, Prasad said, "Let me be very clear, this particular scheme is not against any country, it is only India-positive..."

The companies signing up to take part have also agreed to offer direct and indirect employment opportunities to a total of 1.2 million Indians. The step is also part of Prime Minister Narendra Modi's calls for a self-reliant India aimed at boosting local manufacturing and reducing dependence on imports.

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