Name: Apple may take a bigger bite of India’s manufacturing pie
Brand: indiatimes.com
SKU: indiatimes-com-93
Availability: OnlineOnly

critic

Apple may take a bigger bite of India’s manufacturing pie

preview

Search+››› Apple may take a bigger bite of India’s manufacturing pieBy , Last Updated: May 11, 2020, 11:35 AM ISTSynopsisNew Delhi: Several meetings between ’s senior executives and top ranking government officials over the last few months have paved the way for the iPhone maker examining the possibility of shifting nearly a fifth of its production capacity from China to India and scaling up its local manufacturing revenues, through its contract manufacturers, to around $40 billion over the next five years, say officials familiar with the matter.If this happens, iPhone maker could become India’s largest exporter, say experts.“We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and , availing the benefits under the production-linked incentive (PLI) scheme,” a senior government official told ET.Cupertino-based Apple didn’t respond to ET’s emailed queries.However, sources close to the company’s plans said there were some irritants in the government’s ambitious PLI scheme — recently announced to incentivise local handset manufacturing and exports — which still needed to be ironed out.“There are some problems with some of the clauses. For instance, valuing the entire plant and machinery already in use in its plants across China and other places at 40% of that value and the extent of the business information sought under the scheme are some of the irritants,” a person said.Govt Keen to Address ConcernsOfficials in the government say they will look into all the concerns as the Centre is focussed on bringing hitech manufacturing to India. Prime Minister Narendra Modi met top executives of Apple, Samsung and homegrown phone maker Lava on December 28 last year, which kick-started the process.“India isn’t a big market for Apple as the company sells only a fraction of its total output in India. It is actually looking at India as a base to manufacture and export, essentially diversifying its production out of China,” the official said.Currently, Apple sells phones worth some $1.5 billion in India, of which less than $0.5 billion is locally manufactured, and has market share of some 2-3%. In contrast, Apple is a top investor in China. In 2018-19, it produced merchandise valued at $220 billion in China, of which it exported goods worth $185 billion, according to industry experts. It directly and indirectly employs about 4.8 million people there.According to market research firm IDC, Apple in 2018-19 held a 38% market share of global handset exports, followed by Samsung with a 22% share.India is looking for a bigger slice of the global exports pie, another senior government official said. The PLI scheme had been designed to address disadvantages global supply chains faced in India vis-à-vis say China and Vietnam.COS MAY APPLY SOON“…we are expecting companies to start applying from next week, when the guidelines are out and then the scheme kicks in from August 1. This is the fastest ever planning to execution undertaken by the Indian government,” another government official told ET.The PLI scheme for large-scale electronics manufacturing was notified on April 1 and offers a production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.“We realised companies weren’t relocating manufacturing to India because there were disabilities of almost 10%, so PLI addresses about 6% disabilities, the RoDTeP scheme another 0.27%, and the corporate rate tax cuts address the balance,” said the second official. RoDTeP or Remission of Duties and Taxes on Exported Products is another scheme to incentive exports.The official expects applications from Apple’s component and contract manufacturers, Samsung and a clutch of Chinese investors such as Vivo and Oppo in the next few weeks for the PLI scheme.EYEING EXPORTS WORTH $100B“With such incentives, we expect mobile phone exports out of India to cross $100 billion by 2025, it could be earlier than that…,” the first official said. Mobile phone exports out of India were around $3 billion for 2019-20.According to government data, India’s total exports are estimated to have been $446 billion for April 2019 to January 2020. Out of this, the largest category is petroleum products which alone clocked $36 billion in exports. Reliance Industries in its latest earnings statement said exports from India in FY20 were at Rs 202,830 crore ($26.8 billion).A company must manufacture at least $10 billion worth mobile phones in a phased manner between 2020 and 2025 to avail the benefits of the PLI scheme. The selected applicant is required to meet targets on a yearly basis.The scheme, which has a corpus of Rs 40,995 crore, provides incentive of 4-6% on incremental sales (over base year) of goods manufactured in India and covered under target segments to eligible companies, for a period of five years subsequent to the base year as defined.AMBITIOUS TARGETSBut market experts are sceptical of the government’s ambitious targets.“We don’t have ecosystem ready, which could support any large-scale deployment. The ecosystem right from skilling to ancillaries is almost negligible. This weakens confidence of anyone wanting to plan big and long term,” said Faisal Kawoosa, founder at research agency TechArc.He added that instead of positioning ‘Make in India’ as a competing programme, India should have projected it as complimenting the global supply chain.Experience Your Economic Times Newspaper, The Digital Way!&nbsp;»Stay on top of and that matters. to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.Subscribe to YesNoCan't sayXContinue reading with one of these options:Limited AccessFreeLogin to get access to some exclusive stories &amp; personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &amp; in-depth stock reportsSubscribe NowTo read full story, subscribe to ET Prime₹34 per weekBilled annually at₹2499Already a Member? Super Saver Sale - Flat 30% OffOn ET Prime MembershipAlready a Member? Rs 49 for 1st monthThen Rs. 1,749 per yearValid only with UPI, Credit &amp; Debit Cards Autopay---Subscribe Now(Credit card mandatory)You can cancel your subscription anytime---Subscribe Now(Pay Using Netbanking/UPI/Debit Card)Netbanking, Credit &amp; Debit CardSubscribe with Google₹399MonthlyPLANBilled Amount ₹399No Trial Period₹399₹208(Save 49%)YearlyPLANBilled Amount ₹2,499₹399₹150(Save 63%)2-YearPLANBilled Amount ₹3,599$13.99(Save 40.0%)$33.99Get ET Prime for just ₹2499 ₹1749/yrSpecial OfferGet Flat 20% OffON ET PRIME MEMBERSHIPStories you might be interested inSUBMIT

Search+››› Apple may take a bigger bite of India’s manufacturing pieBy , Last Updated: May 11, 2020, 11:35 AM ISTSynopsisNew Delhi: Several meetings between ’s senior executives and top ranking government officials over the last few months have paved the way for the iPhone maker examining the possibility of shifting nearly a fifth of its production capacity from China to India and scaling up its local manufacturing revenues, through its contract manufacturers, to around $40 billion over the next five years, say officials familiar with the matter.If this happens, iPhone maker could become...

public

Anandita Singh Mankotia

News. Views. Analysis. Conversations. India’s No.1 digital news destination, world’s largest-selling English newspaper - A Times Internet Limited Product

Apple may take a bigger bite of India’s manufacturing pie

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS