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No one could think of this before 2014 | Apple to shift mass production of iPhones from China to India

by IRC-ADMIN - Apr 22 2019 2:03PM

Apple's iPhones will be mass produced in India by Foxconn Technology from this year onwards, marking a shift of the company's production from China, Bloomberg reported. Terry Gou, the group Chairman of the Taiwanese manufacturing company, said Prime Minister Narendra Modi invited him to India. This with the improvement in the environment for businesses to develop in India under Modi has brought about sweeping enhancements in getting increasing FDI for India. It is to be particularly noted that the Modi government all through its tenure has been hell-bent on making the life of businesses in India easier. Be it the ease of doing business rankings or the GST; all have been done with this agenda in mind. Multiple companies like Apple have endorsed the efforts done by the Modi government to boost the economy in the country, they have time and again shown their readiness to invest more in India under Modi clearly showing the increase in foreign direct investment the country has achieved from 2014. Through this article, IRC would like to look into this move by Foxconn technology and what has caused it to do this.

WHAT APPLE HAS TO SAY

Apple has been producing older models of iPhones in Bengaluru for many years, but it will now expand its manufacturing to the newest models. It was reported earlier this month that Foxconn would start trials of producing iPhone X and iPhone 7 in India before launching a full-scale assembly in its factory in Chennai. India's smartphone market is the fastest-growing in the world, leaving behind a stagnated China. Due to Chinese competitors like Xiaomi offering advanced features at lower prices, Apple is losing its market share in the country. It hopes to ramp up its sales in India by manufacturing locally which would let it dodge the 20 percent import duties.

It is unclear how Apple's foray into manufacturing in India will affect its relationship with China, which has been its production hub for years with Foxconn and other partner companies.

There are two assembly sites of Foxconn in Andhra Pradesh and Tamil Nadu, where it also manufactures Xiaomi and Nokia devices. As the US and China engage in a trade battle, it might be helpful for Apple and Foxconn to find a third market to focus on.

Sources told the wire agency that Foxconn's Indian assembly line, Hon Hai Precision Industry Co, would serve local and export markets before Apple's new iPhone models in September. Foxconn's initial investment will be about $300 million to set up, with lined-up investments depending on capacity expansion.

MAKE IN INDIA & EASE OF DOING BUSINESS

It goes without saying that this move by the iPhone manufacturer has come as a direct effect of the reforms taken by the Modi government. Two which needs to be particularly looked into are the Make in India scheme and the ease of doing business. On the back of Modi government’s ‘Make in India’ initiative, the domestic mobile handsets and components manufacturing industry has helped save the country a whopping Rs 3 lakh crore of possible outflow in the last four years, by replacing import of completely-built units (CBUs) with domestically manufactured and assembled handsets, said the India Cellular & Electronics Association (ICEA). In a report, the industry body said the mobile phone and components manufacturing industry is expected to be worth Rs 1.65 lakh crore with about 290 million units by March 2019, while the import is also likely to go down to around 5-7%.

In the financial year 2014-15, of the total domestic requirement of mobile handsets, nearly 78% was met through imports. The net foreign exchange savings are already estimated to be over Rs 60,000 crore, the report said. As per the report, more than 120 new manufacturing units were set up in the past four years, employing over 4.5 lakh people. In the last financial year 2017-18 itself, over 225 million mobile phones were manufactured and assembled in India, which is about 80% of the total market demand, the report showed.

For the first two quarters of the current financial year, the industry is expected to be Rs 75,000 crore in value terms and volume turnover of about 130 million handsets. ICEA chairman and national president Pankaj Mohindroo said in the report that India is now moving towards almost zero imports for mobile handsets. Last year, India became the second largest smartphone market after China by overtaking the USA.

In the last two years, the country has climbed 53 notches in the World Bank's Ease of Doing Business Index, a performance matched in the past only by Bhutan. The biggest gain was in construction permit where India climbed 129 ranks to 52nd place on the back of targeted government effort to remove hurdles. The World Bank has recognized India as one of the top improvers for the year. This year, India features among the report’s list of top 10 improvers for the second year in a row. India is one of only nine countries around the world and only one in BRICS to feature in this list.

The six reforms recognized in this year’s report are starting a business, getting electricity, dealing with construction permits, getting credit, paying taxes and trading across borders.

In dealing with construction permits, India has implemented an online single window system, introduced deemed approvals and reduced the cost for obtaining these permits. In the electricity sector, the time taken for obtaining a new connection has decreased from 105 to 55 days. For resolving insolvency, India has put in place a new Insolvency and Bankruptcy Code and time-bound reorganization procedure for corporate debtors.

Multinational corporations coming to India to start their businesses here have been frequent observation under Modi government unprecedented by any other governments. India under Modi is being valued at the highest level by the foreign countries and our relationship with them has been at an all-time high. A boom in FDI and Make in India directly means a faster improvement in the economy of the country and ultimately a better India for all. Another term for the Modi government would surely mean game-changing.

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