Indian iphones

Will Apple products become cheaper in India?

On 2nd Feb 2017, the Karnataka government issued a release welcoming Apple's proposal "to commence initial manufacturing operations" in the state. The release, signed by state IT Minister Priyank Kharge, said Apple's intentions to manufacture in Bengaluru "will foster cutting edge technology ecosystem and supply chain development in the state, which are critical for India to compete globally”. Production is expected to begin in June.

Sourcing and Manufacturing

• The parts for the iPhone, iPad, iPod and Mac are manufactured, mostly by third parties, across 28 countries. It has 766 suppliers, of which 346 are based in China, 126 in Japan, and 69 in the US. There is one in India, a unit of Flextronics in Sriperumbudur in Tamil Nadu.
• Taiwanese company Wistron, an original equipment manufacturer (OEM) of Apple, will make the iPhones out of its facility in Bengaluru’s industrial hub of Peenya.

Implications for India

• Apple wanted 15-year customs duty holiday on import of iPhone kits, new and used capital equipment, and consumables to establish an iPhone production facility in India. Irrespective of whether Apple gets the tax break, the Indian Apple facility is likely to be only an assembly and not a production facility.
• Manufacturing should help develop ancillary industries to grow. However, assembling alone may not give the expected economic benefits to India. By resorting to only the assembly of iPhones, it may not benefit the larger economy.

Assessment

 Apple products are much more expensive than domestically produced androids. Even if the government were to grant special tax benefits to Apple, their products would still be expensive by Indian standards.