In order to avoid having to tack on a $100 import tax on Apple iPhone models imported into India, Apple decided a few years ago to manufacture older iPhone models in the country. While India is the second-largest smartphone market in the world, it is a developing market and $100 could make a huge difference to a consumer looking to purchase a phone. This is why value for money offerings from Xiaomi, and Samsung's lower-priced Galaxy A handsets have sold well in the country.
Apple advertised "The Amazing iPhone 6s" priced at the equivalent of $375. Keep in mind that this is a four-year-old phone being promoted here. But last month, Apple reportedly started producing a more recent iPhone model in the country, 2018's iPhone XR. While these phones are being manufactured for domestic use only, there has been talk about Apple shifting some of its handset production out of China to avoid U.S. tariffs on Chinese imports (which are scheduled to affect the iPhone starting on December 15th). But this would require expanding Apple's supply chain and manufacturing facilities in India.The downside is that until recently, Apple was building older iPhone models in India. That is why as recently as this past May,
India's tech minister says Apple will export iPhones made in India
Earlier this year, Apple said that it was looking at moving as much as 30% of its production out of China. While India might be considered one of the destinations that would make sense for the company, Vietnam might be the front runner at this stage.
Apple's Indian iPhone production dovetails with Indian Prime Minister Narendra Modi’s "Make in India" campaign. The initiative, over five years old, was designed to get manufacturers to churn out more locally-made products. Corporate tax rates were cut in September as the country seeks to get more tech firms like Apple and its partners like Foxconn and Wistron to expand their Indian operations.
To that end, Reuters reports today that a Finnish company named Salcomp will invest nearly $279 million over five years to fix up a former Nokia handset factory in India. The facility will turn out mobile chargers and components for smartphones starting in March of next year. The news came from India's technology minister Ravi Shankar Prasad who said that the plants will provide jobs for 10,000 people. Salcomp supplies Apple with chargers.
Talking to the media today, India's Prasad displayed a locally produced iPhone XR and said that Apple will start exporting its Indian produced phones. To accomplish this, the tech minister said that Apple will expand its operations in the country. He also noted that exports of phones and components from India will amount to $1.6 billion for each category over the fiscal year ended in March 2020.
The Indian market is a dicey one for Apple because it is so sensitive to price. As a result, consumers in India might be considered fickle and less loyal to brands. For example, during the first quarter of this year, shipments of the iPhone in India declined 42% during the first quarter year-over-year to 220,000 units. Shipments rebounded in April as Apple delivered 200,000 iPhones in the country for that month alone. But the iPhone faced tough competition in April and May as the OnePlus 7 offered Indians a phone with high-end specs at a reasonable price. Counterpoint Research said earlier this year that it expects Apple's iPhone shipments in India to hit 1.5 million to 1.6 million handsets this year. But the trend remains down as 3.2 million had been delivered in the country during 2017 and 1.8 million were shipped last year.