Apple has told the government that it plans to make most of its products in India and that it will establish an ecosystem of partners, which may include contract manufacturers and suppliers.The company is said to be planning a start with local production of its iPhone SE.
"Apple plans to move up the value chain in their next phase, in terms of producing the entire suite of products, definitely all iPhone models, for which their entire ecosystem of partners needs to move in," IT secretary Aruna Sundararajan told ET.
The company's main contract manufacturers Foxconn, Wistron, Pegatron and Inventec are closely watching its plans for that reason.
"They (Apple) have two primary asks—one that they should be able to import the components that they need, and second that it should be cheaper for them to manufacture here than to import," she said.
"The second question is where government has not yet taken a view, because this is to be decided only after the GST (goods and services tax) is finalised."
Foxconn, which is Apple's largest contract maker, is said to be in active talks with the Maharashtra government, with which it already has a $5-billion investment pact, said a senior manufacturing executive.
"It may well be a three-four way game between Foxconn, Wistron, Pegatron and Inventec—two of them are already in India," the person said. Foxconn, Inventec and Pegatron didn't respond to ET's emails.
A query to Wistron, which makes the iPhone 5S and the SE, on whether it will set up a separate, larger plant for Apple went unanswered. Wistron will make the iPhone SE at its Bengaluru facility, according to people with knowledge of the matter.
An Apple spokesperson said, "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."
Sundararajan said her department has met several contract manufacturing firms from Southeast Asia looking to set up shop in India. "It's a question of when, not whether," she said.
Companies Await Rollout of GST Regime
However, companies are waiting for the GST rollout, expected sometime this year, before finalising plans. This also applies to Indian and foreign companies that made investments based on the 11.5% duty differential between locally made products and imports.
"They have asked for long-term stability of policy, but the main issue is whether if they manufacture in India, they would not be at a cost disadvantage compared to earlier," Sundararajan said. "The GST Council is still evolving, so we can't categorically say what kind of view they will take."
The council, a representative body of the Centre and the states, will decide the GST rates.
The key issue will be coping with the transition as GST takes effect, Sundararajan said. Mindful of the situation, the department has set up an Invest India arm to handhold companies, Sundararajan said.
"We have very categorically told them that India is open for investments and that we're there to support them," she said.
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