Apple to start making iPhone in India by June

Apple will start churning out iPhones in India as early as June, sources told The Nikkei Asian Review on Friday. The U.S. company will likely outsource production to Taiwanese partner Wistron, which has a manufacturing facility in the southern Indian city of Bengaluru.

The Cupertino, California-based company, which has long been trying to obtain tax incentives from India’s central and state governments, has agreed with the Karnataka State government to make the phones in Bengaluru’s Peenya Industrial Area.

Wistron will assemble the phones at its existing facility, but the initial production figures have not yet been decided. Apple has not disclosed the investment amount. A Wistron spokesperson in Taiwan told The Nikkei on Friday that “it is certain that our Indian facility will start production of smart devices, including smartphones, within the first half of this year, although we cannot specify clients.”

In a statement on Thursday, the Karnataka government said: “Apple’s intentions to manufacture in Bengaluru will foster a cutting-edge technology ecosystem and supply chain development in the state, which are critical for India to compete globally.”

It added that, “Apple’s decision on initial manufacturing in Bengaluru has further enhanced the reputation of Bengaluru as the most preferred destination for foreign investment and [provided] further validation of the state government policies aimed at fostering manufacturing, innovation and investments in Karnataka.”

Last month, Apple presented plans for local iPhone production to Indian government officials. It has also reportedly sought a 15-year exemption on customs duties on imports of components and equipment, among other things. According to the PTI news agency, “They [Apple] are seeking certain tax exemptions and other concessions. Respective [government] departments will look at those demands,” it said, quoting unnamed sources.

Indian Information Technology Minister Ravi Shankar Prasad said the government would consider the requests with an “open mind.”

It is not yet clear whether Apple has been granted the tax exemptions or other incentives.

Earlier, the U.S. company had sought exemption from Indian authorities on the mandatory 30% local sourcing rule, a prerequisite for setting up single-brand retail stores in the country. According to media reports, the Prime Minister’s Office in June approved Apple’s plan, but the company has not yet spoken publicly about it.

However, in a recent Apple briefing with investors, chief executive Tim Cook said the company is “investing significantly” in India, and is holding discussions on different fronts, including on retail outlets.

Apple controls just 2% of India’s mammoth smartphone market. But for the quarter ended December, the company’s sales surged to a record 800,000 units, up from 500,000 in the same period a year earlier.

Still, it greatly lags behind South Korea’s Samsung Electronics, which has a dominant share of around 23%, and China’s Lenovo Group, at 9.6%. India’s Micromax holds a 7.5% share, according to market research group International Data Corp.

Having an Indian plant is expected to give Apple a boost at a time when its sales in the U.S. and China are slowing.

Through its contractors, the company currently makes iPhones, iPads, iPods and Macs in 28 countries, with 346 facilities in China, 126 in Japan and 69 in the U.S., according to the Times of India.

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