Over the past couple of months, Apple has reportedly been in conversations with several top government officials in India that have been geared towards shifting about a fifth of its iPhone capacity from China to India over the course of next five years. According to experts on the matter, this could make Apple the country’s largest exporter.
A senior government official recently stated in an interview that they expect Apple to produce nearly $40 billion worth of smartphones, which are usually for exports through its contract manufacturers Wistron and Foxconn, while benefitting under the production-linked incentive (PLI) scheme. Out the $40 billion phones produced, only $1.5 billion worth of phones are sold locally, meaning that a major part of production would be destined for countries other than India.
For those unaware, the PLI scheme was designed by the Government of India in an effort to incentivize international companies to manufacture their products in India, especially for export purposes. Sources close to Apple, however, state that some of the conditions under the government’s ambitious scheme could prove to be problematic for the company.
According to sources close to Apple, there are certain issues with some of the clauses mentioned in the scheme. Some of these obstacles include valuing the entire plant and machinery that are currently in use in its plants across China and other places at 40% of that value. Another point of concern for Apple is the extent to which the business information is sought under the PLI scheme. Moreover, Apple must manufacture $10 billion worth of iPhones between 2020-2025 to benefit from the scheme.
A Government official has stated that they will be looking into the concerns faced by brands manufacturing in India as the Centre is focussed on bringing hi-tech manufacturing to the country. The official added that they are expecting companies to start applying once the guidelines are out. He further revealed that other popular smartphones like Samsung and Chinese phone makers such as Oppo and Vivo are also expected to apply for the scheme. The PLI scheme will be effective starting August 1, 2020.
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