Apple Inc. may soon be able to arrest the fall in sales in India. Earlier this week, Foxconn Technology Group chairman Terry Gou said the company will be mass producing iPhones in India this year.
The local manufacturing would help the Cupertino, California-based company avoid India’s heavy import duties, making the phones cheaper here. The government imposes 20% import duty on smartphones to boost local handset production.
iPhone prices shot up last year when the government increased import duties on smartphones from 15% to 20%. Apple's market share in India has declined over the last year due to high pricing and increasing competition from OnePlus.
Apple's iPhone shipments in India fell to 1.7 million in 2018 from 3.2 million a year earlier, slashing its market share to 1.2% from 2.4%, according to Counterpoint Research. In the premium segment, Apple's market share fell from 38% to 23%.
Until now, Apple has had older, lower-cost iPhones including SE and 6S models produced in India through Wistron Corp’s local unit in Bengaluru. Foxconn, the largest assembler of iPhones, meanwhile, has produced phones for Xiaomi and Nokia in India, but not Apple.
“In the future, we will play a very important role in India’s smartphone industry,” Gou said. “We have moved our production lines there."
Last December, a Reuters report said Foxconn would start manufacturing iPhones, including the latest, high-end models, in India starting 2019. Various media reports suggest the Taiwanese contract manufacturer would start trial production of the latest iPhones before its full-scale assembly in its Sriperumbudur plant in the southern state of Tamil Nadu. The move marks a shift in Foxconn's two-decade-long practice of large-scale production of Apple devices in China, which houses its biggest facilities.
Manufacturing in India will also allow Foxconn cut costs because Chinese labour is almost three times as expensive as Indian. According to a Bloomberg report, Foxconn will invest USD 300 million to set up manufacturing capabilities for Apple and is talking with the government about investment terms. The company also plans to increase the number of software people in India from a dozen to about 600.
“We are the primary assembler after all,” Gou said on Monday. “If our customer wants to boost its scale, it will need to depend on us to grow the comprehensive supply chain.”
The Indian assembly line of Foxconn’s Hon Hai Precision Industry Co. would serve local and export markets by the time Apple announces its next iPhone models in September, the Bloomberg report said.
India has become an extremely important for Apple given that the Chinese smartphone market is slowing down and it is losing to local rivals such as Huawei and Xiaomi.