India Plans Subsidies and Tariff Reductions to Boost Apple’s Production Efforts in the Country

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India will soon offer a combination of subsidies and tariff reductions designed to lower the cost of production for Apple and other smartphone manufacturers. The program is part of the Indian government’s broader effort to become a major global manufacturing hub, according to a report from Bloomberg.

India’s proposed 230 billion rupees, or about $2.7 billion USD, in financial incentives and tariff adjustments target the consumer electronics sector, particularly smartphone makers such as Apple. The government’s measures are intended to boost the production of critical electronic components in the country, including microprocessors, camera modules, multi-layered printed circuit boards, storage, and batteries, most of which are currently imported from China and other countries. The subsidies are expected to vary based on the specific component.

The program is just the latest move by Prime Minister Narendra Modi’s government, which has in the past rolled out several other initiatives, including the Production-Linked Incentive (PLI) program, which led several large companies, including Apple and Samsung, to either establish or expand their production facilities in India.

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The government’s new proposal is more granular, specifically targeting the establishment of a domestic supply chain for components.

Apple has steadily increased its Indian production footprint since the Cupertino firm began assembling iPhones in the country back in 2017, which initially focused on assembling older models. In recent years, Apple has ramped up its iPhone assembly operations, with Indian-assembled iPhones now accounting for close to 15% of the company’s global iPhone output, accounting for nearly one in seven iPhones. Apple now assembles the iPhone 16 in India, commencing assembly operations just a few weeks following the handset’s debut.

India’s proposed subsidies could further drive Apple’s plans to increase device assembly in the country, possibly enabling the simultaneous launch of future iPhone models produced in both China and India. The Indian government is expected to announce the final decision on the measures during the upcoming federal budget in February.

In December, Bloomberg reported that Apple will begin assembling its AirPods wireless earbuds in India for the first time early this year. Foxconn is readying a factory near Hyderabad in Telangana state, with an eye toward assembling the AirPods beginning around Q1 2025.

The facility is already conducting a trial assembly of AirPods, with the aim of quickly ramping up production once the facility is determined to be ready to go. 

Apple first began talking to Foxconn about assembling its AirPods in India in 2023. Foxconn executives were initially reluctant to proceed with the plan due to relatively low profit margins. However, the decision was made to proceed with the assembly plan to “reinforce engagement” with Apple.

Apple’s decision to begin AirPods assembly in India was partially spurred due to the financial incentives offered by the Indian government to encourage the assembly of earbuds and smart watches in the country. The plan was also part of the moves Apple is making to lessen its reliance on China for assembly of its popular devices and accessories. Apple is making a move away from its previous China-centric assembly policy, due to rising geopolitical tensions between the United States and China.



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