Government officials in India have announced that US tech giants Apple will start building iPhones in the country later this year. It is believed the company’s decision to do so is in order to tap into a booming middle class while sales in China slow. The IT minister for Karnataka confirmed that Apple agreed to assemble its hugely popular iPhones in the southern state, whose capital Bangalore is recognized as India’s technology hub.
Apple did not comment on the press release issued by the Indian Minister, and the company remains a small player in India, where sales of its smartphones trail behind rivals Samsung. However, Apple CEO, Tim Cook said earlier this week that he would ‘invest significantly’ in the country which has a population of 1.25 billion people.
Minister of Information Technology and Biotechnology, Priyank Kharge said he expected Apple to begin manufacturing operations in April. He said: “We have an understanding with Apple and we expect them to start manufacturing in Karnataka by the end of April.” He added that the operation would likely produce iPhones for the domestic market.
Research conducted by Canalys has established that Apple has only 2% of the Indian market, while rivals Samsung have 23%, by pricing itself exclusively at the luxury end, Apple has distinguished its brand from Samsung, which produces both low-cost and high-end smartphones.
It emerged last year that Apple had a 48% share of the premium sector in which phones sell for $450 and above, the US tech firm also applied to open Apple Stores in India, but it was rejected because of a rule which states that foreign retailers must source 30% of its products locally.
Those rules have since been relaxed, with New Delhi allowing companies up to eight years to meeting the required sourcing demands in order to attract foreign investment in the hope to boost job creation.
It has not been disclosed whether or not the Karnataka plans would enable Apple to clear that hurdle, but some experts are suggesting that manufacturing locally would significantly reduce the company’s costs and enable to sell at lower prices.
Apple enjoyed a brilliant 2016 in India, and shipped more than two million devices to the country – and now with the plan to manufacture there it will give them greater flexibility to respond to market changes. Apple sells through third-party retailers in India, which accounts for only around 1% of global iPhones sales. However, experts insist that India’s massive population and low number of smartphones users relative to its size means it represents a huge potential market.
Apple CEO, Tim Cook, visited India last year and met Indian Prime Minister Narendra Modi and presented him with a gold iPhones to launch the premier’s new app. If the move is confirmed, many analysts see it as a coup for India’s government which has been trying to persuade foreign companies to manufacture in the country.
Reports in Indian media said Wistron Corp, a Taiwanese electronics manufacturer, was lined up to assemble iPhones at a plant on the outskirtsof tech hub Bangalore. Apple outsources all its manufacturing globally.