Guru Gyan
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Apple Joins The ‘Make In India’ Movement

The American multinational technology company is moving its production from China to other countries, including India, slowly and steadily.

What Happened?

Last week, two sources told Reuters that Foxconn, the supplier of Apple, is looking to invest up to $1 billion to expand a factory in Southern India. The investment will be made in the Sriperumbudhur plant, which is 50 km West of Chennai. This investment will take place over the course of three years.

This move is part of Apple’s quiet and gradual production shift away from China. The most important thing to note here is that that a production shift on such a massive scale has never been reported before. So, why is it happening now?

Why Now?

According to Counterpoint Research, in Q1 2020, Xiaomi has a 30% market share, followed by Vivo with 17%, Samsung with 16%, Realme with 14%, Oppo with 12% while the other brands have a market share of 11%. Other brands including Apple, Lenovo, Motorola, LG, Google, Asus individually have less than 3% market share in India.

Even though Apple has established itself as a strong player in the premium smartphone market, its product prices are too high for most of the consumers in India. Why you ask? Because of the high import taxes. If Apple builds products locally, then the price of its products will be reduced and attract a lot of consumers.

Recently, amid the Indo-China tensions, the Indian government started 100% manual checking of Chinese cargo at ports and airports between June 22–30 and this led to a 10-day backlog in supplies of phones and parts. And this situation may or may not become worse in the future. However, this wouldn’t be a problem for Apple if it moves its production to India.

These days, more and more people are looking to avoid buying products that are manufactured in China and are looking for local options. When Apple’s devices are manufactured in India and sold in India, we believe that consumer’s sentiments towards the product will go through a drastic change. Also, when Xiaomi begins to lose its market share, we feel that Apple would be there to capture it.

Benefits For Foxconn

It is said that this investment is in line with the new scheme launched by the Indian government called the production-linked incentive (PLI). As per the scheme, up to ₹40,951 crores will be awarded over a period of 5 years to companies and this is done to augment domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic companies.

It is also said that Foxconn was among the companies which had applied to the government for receiving the benefits from the scheme.

How Will This Help India?

The Sriperumbudhur factory already assembles iPhone XRs and it is said the other iPhone models now being made in China will be produced at the factory. This new investment could lead to the creation of 6,000 jobs, meaning that local people will be hired to work at the factory. Thus, this investment helps the local economy.

In conclusion, Apple has some big plans for India. The firm has already confirmed that it will open the first Retail Apple Store in India by 2021 and the company’s CEO Tim Cook said that Apple is looking to establish its online store later this year. With the U.S-China trade tensions continuing to grow, we may see more companies shifting their production away from China to other countries. As India offers cheap labour when compared to China, we may also see companies establishing their factories and plants in our country, thus giving a boost to our economy.

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