The Covid-19 pandemic has obstructed the supply chains around the globe forcing several hardware and technology companies to reconsider their strategy. Reportedly, Apple is planning to shift one-fifth of the iPhone manufacturing units to India. Prime Minister Narendra Modi’s Government offers PLI (Production-Linked Incentive) scheme which provides several incentives to large production companies.
The Production-Linked Incentive scheme was launched by the Indian government not too long ago to encourage domestic manufacturing of mobile devices and particular electronic components. For any company to take advantage of this scheme that provides an incentive of a 4-6% on incremental sales, the company should mass-produce a minimum of $10 billion worth of mobile phones in a planned way between 2020 and 2025.
"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 (PLI) scheme," said a senior government official to ET.
Once the agreement is finalized, Apple Inc. will give a nod to its supply partners Wistron and Foxconn to manufacture and assemble iPhones not just for regional consumption, but also to export them to the foreign markets.
At present, smartphones worth $0.5 billion are manufactured in India whereas smartphones worth $1.5 billion are sold in India. India manufactures the older iPhones like the iPhone 7, 8, and XR. Considering the huge difference between the manufacturing and consumption in India, shifting their manufacturing operation to India is a beneficial deal for Apple as they can save on the import duties that are slapped on the iPhones that are not manufactured in India.
To conclude, certain reports suggest that there are a few “irritants” in the government’s PLI scheme for Apple. However, if the deal sails smooth, it could serve as a great motivation to the “Make in India” scheme and encourage other companies to follow suit.