Apple Could End up Making Premium iPhones in India to Sell Globally if Government Gives Them Tariff Cuts

Jan 25, 2019 08:43 EST
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A couple of days back it was reported that that largest iPhone manufacturer, Foxconn is considering assembling smartphones in India. Right now, Apple’s partner Wistron assembles lower-end iPhone 6s and iPhone SE in India for sale within the country but Foxconn allegedly plans to make higher-end iPhones there too. According to a new report, a trade association in India is now seeking financial incentives in the region in order to become the manufacturing base of choice for global manufacturers. This can also mean that Apple might end up making premium iPhones to sell these units globally.

Apple Might Shift the Bulk of Its Manufacturing Operation to India if Worst Comes to Pass

The U.S. and China are currently in the midst of a trade war and if the situation exacerbates, the iPhone imports into America could be slapped with as much as 25 percent tariff. The latest crops of iPhones are already not doing so well and the price hike will worsen the situation. To be prepared for the best, Apple apparently wants to keep a contingency plan ready so that it can move its manufacturing operations from China to India.

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Such an arrangement would be mutually beneficial for India and Apple both. The Indian Cellular and Electronics Association (ICEA), of which Apple is also a part of, has now submitted a proposal which calls on the government to provide relief in the form of tax breaks to boost the saturating economy. The proposal has come at a crucial time, as the Indian government is gearing up to announce its annual budget next week.

If the government green lights the proposal, it would make it easier for manufacturers to import parts into the country and they will also receive tax credits for exporting their products. In return, more jobs would be created in India and its balance of trade would also get a boost.

Of course, the logistics of transferring the manufacturing capacity to India from China would not be easy as Apple is entangled in a complex supply chain, but with its Taiwanese partner Foxconn in tow and the prospects of better finances, Apple would be able to pull this off, provided the Indian government accepts the proposal. If the trade war worsens, Apple could be looking at a 25 percent tariff hike, which would force the technology giant to move production out of China.

It’s not just Apple that is seeking production solace in India, but smartphone giants like Huawei and Samsung are reportedly in talks. According to the report, the government aims to export around $9 billion worth of smartphones in the fiscal year ending March 2020, making it a significant jump from $100 million in 2017.

News Source: Reuters

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