Bengaluru: Apple Inc’s India drive is likely to get a push as the company’s supplier partner Wistron Infocomm is expanding its India manufacturing facility.
It is being seen as a move likely to help Apple India reduce prices by at least 20% as locaisation will reduce overall production costs.
Wistron Infocomm has started carrying out a significant expansion of its existing facility in Kolar near Bangalore as Apple Inc. continues to source more ‘assembled-in-India’ iPhones.
The information was revealed in a regulatory filing by air conditioning equipment provider Blue Star.
According to the Blue Star statement, Wistron is a Taiwan based contract manufacturer of electronic goods and is one of the major manufacturers of iPhones for Apple.
Kolar facility
“Wistron has been producing Apple devices at its existing factory at Kolar, Bengaluru, and has now embarked upon its Phase II expansion as a part of which, it is constructing a large manufacturing block and an IT building,” states Blue Star.
The order is for an air conditioning and ventilation system of 4000 ton capacity, electrical works, a fire-fighting system, plumbing, a compressed air system and a building management system.
Wiston’s decision to ramp up its production facility in Kolar comes in the wake of a major push by the Indian government to cut down India’s electronics imports bill, which runs into hundreds of billions of dollars and accounts for more than half of the total non-oil imports made by India every year.
Taiwan headquartered Wistron is one of the three Apple suppliers who reportedly plan to invest close to a billion dollars under the Government of India’s new Production Linked Incentive scheme for manufacturers.
According to a report, Wistron plans to invest around Rs 1,300 crore to expand its capacity from around 200,000 per year to 400,000 per year, creating an extra 10,000 jobs in the country.
Under the PLI scheme, companies get back as incentives from the government between 4-6% of the value of the incremental production they achieve under the scheme.
Production linked incentive
As per the government scheme, if a company used to make phones worth Rs 10,000 crore a year and increases its production to phones worth Rs 15,000 crore, the company can avail at least Rs 200-300 crore per year as an incentive from the government.
For foreign players like Wistron, the scheme is available only to those phones priced above $200 per piece.
The scheme is designed to reduce India’s dependence of imported electronics, particularly from China.
Besides, manufacturers will also save another 10% or so in costs by way of lower import tariffs, as finished phones are charged a higher import duty compared to components.
All this, however, is only likely to lower India’s electronics import bill by around 30% or so, because the country does not have factories that make smartphone chips or processors, memory chips or displays.
Most of the manufacturing that will be done in India will be focused on low-value products like chargers, plastic components, bodies, and in some cases, the printed circuit board.
The expansion of local production is likely to mean a reduction of around 20% in the price of iPhones in India.
This article first appeared in the NFA Post and is republished with permission
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