iPad production in India likely to start soon as Apple gets a tax deal
iPad production in India looks likely to start soon, after Apple largely succeeded in a bid for greater financial incentives from the government. The Cupertino company rejected a previous offer, stating that it was not enough to cover the costs of setting up the iPad assembly there.
While the government incentives are open to any manufacturer, they were designed with Apple as the key target…
Past negotiations on iPhone assembly
India has long held ambitions to become a global manufacturing center, with a number of financial and other incentives introduced under the Made in India banner.
This led to lengthy negotiations between the Indian government and Apple over the nature and scale of the incentives, dating back to at least 2016. The opening of Apple Stores in India was a major bargaining chip on the government side, withholding permission to open retail stores until local manufacturing targets were hit. It took until this year for the first Indian Apple Stores to open.
The government rejected most of Apple’s demands, but the Cupertino company did go ahead with iPhone SE assembly in the country, beginning in 2017.
The iPhone maker eventually got one of the tax concessions it had sought: the ability to import iPhone components into the country without paying any import taxes on them.
Apple continued to seek incentives for increasing the proportion of iPhones made in India, and the government subsequently announced a scheme designed to reward smartphone manufacturers for boosting production volumes. These incentives were worth between 4% and 6% of the value of phones, depending on volumes.
The rapid ramp-up of Indian iPhone production
Apple subsequently dramatically increased the number of iPhone models made in India, including the latest iPhone 14 model in 2022. This year, iPhone 15 assembly is expected to begin simultaneously in both China and India.
A report last year suggested that a quarter of all iPhones could be made in India by 2025, and another this year went even further, indicating that India could account for 50% of global iPhone production by 2027.
Just this week, Foxconn broke ground on new iPhone plants in India, with AirPods also expected to be made there.
iPad production in India the next goal
After the iPhone, the Indian government turned its attention to incentives for tablet and laptop production, with Apple again the main target.
Again, negotiations have been underway for several years, and in 2021 the Indian government announced a very similar “cashback” offer as it had for smartphones. This one, however, was less generous.
India on Wednesday approved a 73.5 billion rupee ($1.02 billion) plan to boost local manufacturing and exports of IT products such as laptops, tablets, personal computers and servers, the technology minister said […]
It provides manufacturers cash-backs of between 1% and 4% of additional sales of locally made goods over four years, with 2019-2020 as the base year.
Apple asked for the incentive pot to be almost tripled, to 200B rupees.
Tablet and laptop incentives increased
Bloomberg reports that Apple has been mostly successful, the government agreeing to an increase to 170B rupees, equivalent to $2B.
India is unveiling a 170 billion rupee ($2 billion) financial incentive plan to draw makers of laptops, tablets and other hardware to the South Asian nation as companies look to diversify supply chains beyond China.
Prime Minister Narendra Modi is capitalizing on the early success of Apple Inc.’s local assembly operations — which have helped the US company produce about 7% of its global iPhone output — to pitch the country as a viable global manufacturing hub. New Delhi wants to bring more tech production to India after China’s trade war with the US and its strict Covid policies prompted companies to weigh other options.
Apple of course needs to reduce its reliance on China as a manufacturing hub, and India is seen as having the greatest potential for a large-scale move of manufacturing capacity.
However, while Apple needs India, India also needs Apple. The company brings a lot of jobs and tax revenue to the country directly, but is also likely to encourage other tech giants to follow in its footsteps. For that reason, Apple has been able to drive a hard bargain on incentives.
With this much bigger deal on the table, it now seems a pretty safe bet that we’ll see iPad production in India beginning in the not-too-distant future.
Photo: Daniel Romero/Unsplash
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