Apple iPhones will be made in Karnataka. The government of Karnataka on Thursday said that it welcomed a proposal from Apple Inc to begin initial manufacturing operations in the state, in a sign that the tech company is slowly moving forward with plans to assemble iPhones in the country.
“Apple’s intentions to manufacture in Bengaluru will foster cutting edge technology eco system and supply chain development in the state, which are critical for India to compete globally,” the government of the south Indian state said in a statement.
While no deal or memorandum of understanding has yet been signed, it is being said that Apple will go ahead with contract manufacturer Wistron to make iPhones in the country. The plant is being set up in Peenya, on the outskirts of Bengaluru.
Has Apple got its way?
Apple has declined to comment on the opening of the new Wistron plant in Peenya, which would assemble iPhones. However, after the 25 January meeting with government and DIPP authorities, Apple had this to say: “We’ve been working hard to develop our operations in India and are proud to deliver the best products and services in the world to our customers here. We appreciate the constructive and open dialogue we’ve had with government about further expanding our local operations.”
Apple had a lot of ‘demands’ going in. Some of these included, wanting an indefinite exemption from the 30 percent domestic sourcing rule, it would only make iPhones for the Indian market, among other things. At this point it is not clear if any one or all of these demands were fulfilled. We hope none of them were, as we have argued in the past how it would set a bad precedent and why Apple needs India more than the other way round.
Officially there is no data out on what has been agreed upon. “There is still no clarity on what has happened with the demands yet. But one thing is clear: India is now a very critical market for Apple. So as much as Apple needs India to increase its bottomline, India also has got a great value proposition with Apple coming here. It will give a boost to the ‘Make in India’ program and increase its credibility on a global platform,” said Tarun Pathak, senior analyst with Counterpoint Research.
Pathak says however that it is unlikely that the government must have agreed to all of Apple’s demands as there are around 40 other companies as well who make in India.
“While there is no clarity on the matter, there is absolutely no intent to give waivers in complete to Apple,” says Sanchit Vir Gogia, chief analyst at Greyhound Research. “There may be some waivers, sure. But the government’s focus is the need to offer a level-playing field to all participants,” said Gogia.
Anshul Gupta, research director at Gartner also echoes the sentiment that there is no incentive for the government to favour Apple over others.
“There could have been demands which could make sense for the government to accept for the benefit of the entire device market, not for Apple alone. They might have come up with some fair arguments, but that’s a different thing,” said Gupta.
Should other smartphone makers feel the heat?
“Absolutely, they have all the reasons to feel threatened,” said Gogia. According to Gogia, most of the local assembling units are not that sophisticated, and an iPhone assembling unit will have state of the art technologies which could change things.