Since Tim Cook’s visit to India earlier this year, the chances of Apple considering India as a potential location for iPhone manufacturing have multiplied. Although the exact details of Cook’s discussion with PM Narendra Modi were not made public, the possibility of iPhone manufacturing plant in India has been highly speculated. Just like any other Apple rumour, one should take this one with a grain of salt. I have summarised below the things for and against this potential move. Take a look and judge for yourself.
The One With the Big Player
Apple has been in talks with one of its largest contract manufacturing partners, Foxconn Technology Group, about exploring the possibilities of iPhone manufacturing in India over the next few years. As per a brief statement to Reuters, Subhash Desai, Industries Minister of Maharashtra, said, “Foxconn is sending a delegation of their officers to scout for locations in a month’s time.”
The One With the Bad Experience
That being said, I am not sure how committed Foxconn may be, because it has already burnt its fingers with the shutdown of the Nokia plant in Chennai in February 2015. The company is still stuck in the labyrinth of litigation, with laid off employees weighing them down as well. So, Foxconn will have to sort out its current issues before setting up a new iPhone manufacturing plant.
The One With all the Competition
Although India could prove to be a hugely profitable market for Apple, Foxconn will have to give it a serious thought before making a commitment. The market in India is dominated by multiple players who are not above colluding against Apple. In that light, the reports about the company setting up a $10 billion iPhone manufacturing plant in India seem barely more than wild rumours, especially since we’ve had no official confirmation.
The One With the Long Term Plans
Analysts are saying that the local manufacturing of the iPhones would help Apple bring its products quicker to the market, making them affordable for the Indian customers. This, in the long run, would turn India into an export hub, with the need to create an elaborate and extensive supply chain for managing its logistics. Apple is keen on opening wholly owned stores in India and setting new service standards, which Cook believes is essential for winning customers.
The One With the Potential
Since the sales in the biggest smartphone markets like China and the USA are slowing down, Apple needs to push its sales in a market where the growth will be tremendous. And that, in a large way, points to India. In a recent interview with the Washington post, Cook has reportedly spoken of India as a market where Apple sees a significant potential. He said, “India is fast-growing, but our base there is smaller.”
The One With the Fiscal Sense
Another incentive that Apple might consider is that India has recently started offering differential duty structures for companies making phones in the country, which means that smartphones and devices will be cheaper than imports. Anush Gupta, Research Director at Gartner, said, “Tax benefit will remain one of the key drivers for setting up a new base in India.” With the introduction of such tax benefits, it would make a lot of fiscal sense for Foxconn to set up some manufacturing plants in India.
Until anything is official, we wouldn’t know if and when Apple will give a green signal for setting up a manufacturing facility in India. Perhaps, only Cook can tell us what exactly is cooking!
