Apple’s contract manufacturers are expected to produce Rs 47,000 crore worth of iPhones in India this fiscal, the second year of a production-linked incentive (PLI) program that began in April. This is almost five times the Rs 10,000 crore iPhones produced in the country by Foxconn and Wistron in FY22.
The expected production in FY23 is also more than double the requirement for iPhone makers to qualify for incentives in the second year under the smartphone PLI program. The plan calls for each contract manufacturer – Foxconn, Wistron and Pegatron – to produce phones worth Rs 8,000 crore.
Market watchers expect Apple to ship a record 7 million units this year, with a market share of 5.5%, a new all-time high, thanks to huge demand for a broader device portfolio and higher local production and attractive financing plans.
Still, India accounts for less than 1.5 percent of Apple’s global sales; more than 60 percent of iPhone production will be exported — one of the main goals of the PLI plan, people familiar with the matter said.
The PLI plan for smartphones, proposed in 2020, aims to move smartphone manufacturing from China and Vietnam to India, especially amid border tensions with Beijing.
The scheme, which offers incentives in the form of 4-6% cashback over five years, attempts to offset the disability in the 10-15% range that currently exists between India and its manufacturing rivals. The total expenditure for the scheme is Rs 40,951 crore for 5 years.
Over the past 15 years, Apple has produced $8.5-90 billion in iPhones at factory prices outside of China through contract manufacturers.
PLI plans $6 billion in second year
In India, the company is expected to produce phones worth more than $6 billion ex-works in the second year of the PLI program, the sources said.
None of the companies responded to email inquiries sent by ET.
iPhone production in India started with the iPhone SE in 2017, and the locally produced lineup now includes the iPhone 11, 12 and 13.
Bengaluru-based Wistron and Pegatron, which started production this month, mainly manufacture the iPhone 12 in Tamil Nadu, while Foxconn manufactures the iPhone 11, 12 and 13 at its factory in Tamil Nadu.
Encouraged by the success of the smartphone PLI program, Samsung has also stepped up local production in India, with the government rolling out 14 similar programs in industries such as IT hardware and white goods over the past two years.
Total iPhone production is expected to exceed Rs 47,000 crore this fiscal, possibly the largest combined production of all PLI plans, one of the people said.
“While exports will certainly help to achieve desirable foreign exchange, a substantial increase in the production of electronic products will also stimulate the country’s demand for semiconductor chips,” said Navkender Singh, research director at IDC India. In December, the government announced a 10 billion yuan USD Semiconductor Production and Design Incentive Program.