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Apple Foraying in India with a $1 Billion Investment

As the iPhone maker expands its manufacturing base in India, various positive effects will be borne out of this move.
BY Jaspreet Kaur
Feature Writer, BusinessEx
Sep 18,2019

The tech giant, Apple has recently proclaimed to enter India and make an investment amounting to $1 billion. The move has come when the tech firm decides to start exporting its mobile phones, iPhones from India throughout the world. 

California-based company has made this decision owing to the stiffening US-China trade war, which has made business conditions difficult for many companies, who are depending on China for manufacturing their products, as reported by the daily news, The Economic Times. Consequently, the companies are ascertaining other locations with a similar environment like China for the manufacturing process, as reported by the daily news, The Times of India. 

In this investment move, Taiwan-based manufacturing firm, Foxconn will be the investment partner of Apple. The tech giant’s Chennai-based factory will be utilized for manufacturing products and then, supplying them across the globe. 

Government Appeasing iPhone Maker and others to Manufacture in India 

In a bid to attract giant tech companies, the Indian government has proposed to ease conditions for establishing or expanding manufacturing base in India. According to the daily news, Money Control, in the AIMA event, IT Minister, Ravi Shankar Prashad said that the government has asked Apple to expand its manufacturing base in India and use the country as an export hub. 

He further said the technology industry will render fresh incentives and sops to galvanize phones, as well as the electronics industry, in the coming two to three months.   

A complete roadmap consisting of sops and incentives will come up in the coming months, Prashad said in his statement. Further, NITI Aayog will emerge with a plan in relation to this, after conferring with IT Minister.   

These plans will aid tech companies in releasing their manufacturing and export contracts.  

Benefits India will be Receiving 

As the iPhone maker expands its manufacturing base in India, various positive effects will be borne out of this move. Firstly, the company’s share will increase in smartphone sales if the prices spike in comparison to its rival smartphone makers. Secondly, the move, in turn, helps the company to meet 30 per cent local sourcing rule and initiate its physical stores in the country, as reported by the daily news, The Economic Times.

The company is also planning to launch its 3 brick-and-mortar stores in Indian cities-Delhi and Mumbai and one online store, according to the cited media report. 

By manufacturing cell phones in India, the tech company will be leveraging ‘Make in India’ plan and further, exporting products throughout the world. This, in turn, will make India not only a manufacturing hub but an export hub as well. Furthermore, the country will become an enticing foreign investment destination owing to the increased exports to foreign nations. 

Apple’s $1 billion bet on India has turned out as a result of relaxing FDI (Foreign Direct Investment) plans. On August 28, 2019, the Indian government eased FDI norms in a bid to attract foreign investors to India and leverage the weakening Indian economy. The government permitted 100 per cent foreign investment in contract manufacturing and coal mining industry. It further relaxed local sourcing regulations for single-brand retailers and allowed 26 per cent foreign investment in digital media. All these amendments were made keeping in mind the country’s slow economic growth. 

 

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