Apple is likely to begin producing iPhones for the local market in Bengaluru as early as April this year, helping bring down the cost of its premium devices and appealing to a larger base of buyers.
The world’s largest smartphone maker has contracted its Taiwanese supplier Wistron to locally assemble devices at its plant in Peenya, an industrial suburb of Bengaluru. However, the scale of Apple’s India manufacturing operation is still hinged on negotiations with the Central government over sops.
“Winston has begun upgrading infrastructure at the Peenya location, indicating Apple is keen to make iPhones here. An agreement is yet to be signed,” a government official said. “More details will emerge once Apple’s talks with the Central government is over,” the official added.
In a statement on Thursday, the Karnataka IT minister said that Apple representatives had met with the state’s ministers and officials on manufacturing devices here. Apple’s delegation was led by Priya Balasubramaniam, vice-president iPhone operations, a native of Bengaluru city who joined Apple’s headquarters in Cupertino in 2001.
“Our pitch to Apple was that they have the entire ecosystem ready here in Bengaluru. No other place in India can offer the pool of hi-tech talent, researchers and app developers,” Karnataka IT minister Priyank Kharge told Business Standard.
Apart from setting up manufacturing capabilities in India, the company will also setup retail stores, hoping to woo a lot more consumers with its devices. The company has already received a waiver from the central government to bypass the 30 per cent local sourcing norms that was holding it back in India.
India is the last large open market for Apple and it plans to invest heavily here over the next few years, as it gears up for increasing demand for premium devices. Currently, the company controls just three per cent of the 100 million-plus smartphone market in India, but expects India to become a large market in the next five- to ten-year period.
In the quarter that ended December, Apple said it posted record revenue results in the country despite a slowdown in consumption due to the government’s demonetisation move. In the previous quarter, the company had said sales of its iPhones grew by 50 per cent in the 12 month period, signalling a positive environment.
Apple continues to use a two-pronged attack in India, wooing customers with its latest iPhones but simultaneously pushing older models at more affordable costs. Nearly 45 per cent of Apple’s iPhone sales continue to come from models like the iPhone 5s that cost under Rs 20,000 on popular online retail channels in the country.