Local manufacturing will allow Apple to dodge Indian import duties.
Timothy B. Lee
After years of building the iPhone primarily in China, Apple is preparing for a major expansion of iPhone manufacturing in India. Terry Gou, chairman of contract manufacturer Foxconn, says the company is planning to invest $300 million to expand iPhone manufacturing capacity there—with much more investment possible in the future.
Taiwan-based Foxconn has long been the main company Apple has relied on to manage iPhone assembly in China. Bloomberg reports that Apple already has a limited manufacturing presence in Bangalore, producing older iPhones. But now Foxconn will be dramatically expanding iPhone manufacturing in the country, producing the latest iPhones near the southern city of Chennai.
Producing iPhones in India will give Apple some regulatory advantages in the large and fast-growing Indian market. According to Bloomberg, it will allow Apple to dodge 20 percent import duties and enable Apple to open its own stores in India.
Local production could also allow Apple to take advantage of lower labor costs in India. And Apple will need to bring costs down if it wants to make serious inroads in the Indian market. Low Indian incomes and the high cost of the iPhone have meant very low iPhone sales in India. According to Bloomberg, Indians bought 140 million smartphones in 2018, but Apple only sold 1.7 million of them.