KOLKATA: Apple's plan to assemble iPhones in India will be drastically different from those of rivals with plants in the country.
The iPhones proposed to be assembled in Bengaluru will be primarily for sale only locally and not meant for overseas markets. Additionally, none of the components will be sourced from local companies, two senior industry executives aware of the plans said.
Apple also won't customise the handsets for India even though the local team has been pushing the Cupertino-based company to roll out a dual-SIM iPhone, considering that about 80 per cent of the domestic market consists of such devices, the executives said.
Apple's position on assembling iPhones in India is in contrast to its biggest rival Samsung Electronics, which exports products made at plants set up in Noida and Sriperumbudur, and other companies that have started basic sourcing of parts from the country.
Still, the assembling operations are crucial for Apple's plans for India, the world's fastest-growing smartphone market. The company management has been pushing India to double revenue to $3 billion by 2017-18. Local assembly will help Apple to comply with norms to start operating company-owned outlets in India and get a 10 per cent tax benefit, which will allow it to reduce iPhones prices, the executives said. "The Indian assembling unit is not being set up to add capacity to global operations, considering the company just announced a decision to cut global production by 10 per cent. It's to boost its other business plans in India and also build a strong relationship with the government," one of the executives said.
Apple currently assembles iPhones in China through Foxconn, Pegatron and Wistron for its global operations. It also has an iPhone assembling unit in Brazil run by Foxconn.
The executives said Wistron became a partner of choice for its India assembly plan since it had already set up a repair unit for the company in Bengaluru last year.
The facility, which is running at sub-optimal capacity, has the capability to undertake hardware repair work such as screen replacement, which was earlier done in China and Singapore.
Apple plans to start assembling iPhones in India this year. The decision was taken barely seven months after Prime Minister Narendra Modi proposed the idea to Apple CEO Tim Cook, who visited India in May last year. The company took almost three years to decide on setting up its distribution and repair centres in India, both of which came up last year, the executives said.
In 2015-16, Apple overtook domestic handset maker Micromax Informatics by revenue to become India's second-largest smartphone maker after sales increased 54 per cent to `9,997.1crore ($1.5 billion).
"The bulk of Apple's revenue is driven by older handsets, which are priced at about `20,000. The company wants to push sales of the new iPhone models in India, which is possible by availing tax benefits from local manufacturing," one executive said.
Apple's market share in the Indian smartphone market was 1.1 per cent in the July-September quarter, with Samsung leading with a 22.6 per cent share and Micromax in second spot with 9.9 per cent, according to Hong Kong-based Counterpoint Technology Market Research.
Source: economictimes.indiatimes.com