For the last couple of years, Apple has been trying to double the already massive revenue amount. And they know that India is one of their only economically feasible options. But in the last few months due to the coronavirus, and the ongoing India-china dispute, Apple started to question its decision. Apple is set to capitalize on it and decided to offer more than 10000 jobs in India only if it begins production on a larger scale in India.
Why Apple wants to invest in India
India is a massive market, no doubt about that. But such big markets tend to have more competition than others. Apple knows that India is no exception. India has a population of over a billion people. And as we know, smartphones are the daily necessities of life; all those people need a phone.
Most smartphone companies have their eyes on these people, so companies from China, Japan, and the USA are investing heavily in India. Apple wants its share of the pie, but due to its high priced products, Apple did come up with a few tactics which lead to the present situation. They will set up new plants to pump up production. In simple words, it means more employees are needed for production.
Apple started to manufacture iPhones in India, to save dollars’ worth of import tax. But that didn’t come easy. Apple was taking a considerable risk for strategizing this move.
Apple’s contracted manufacturers Foxconn now face many problems as India and China’s current situation is quite disturbing. What’s next? This opens a vast market opportunity in India. Why? Because now this partner route can be diverted to India. In simple words, it will set up production in India, and employ more Indians.
Foxconn only assembles parts in India, but the pieces were made in China and imported to India. Still, India banned most of the china imports due to conflict, and many companies have to pay the price, which also includes Apple. India recently let Foxconn have its shipments, but that only puts Apple in a more confusing spot.
Why Apple is eager to invest
Currently, Apple’s Chennai plant only manufactures iPhones SE in India and assembles the iPhone XR. It may not make new models in India. A few things could force Apple to stay in India and even increase its manufacturing units. The reason for their rising eagerness is India being to 2nd largest market to produce and sell in. Following the trend, Western Corp, Pegatron, and Compal Electronics, producers of Apple iPhones have also announced that they will set up a plant in India.
India is the second-largest market in the world after China, so its demands are rising with each passing year. It’s assembly manufacturers, Foxconn’s investment of 1 billion dollars will create around 6000 jobs. And Wistron’s investment will increase jobs up to 20000 on top of the existing count.
Favorable factors for Apple in India
When the government is trying to progress as fast as possible, they usually lower the tax rate for foreign companies like Apple to invest in their country, and India is the same.
If the company wants to invest in India, the government will support them, and Apple is no exception. By manufacturing the iPhone and other products in India, Apple saves a lot of money on import duty. Since the components’ price gets cheaper, it’s not surprising to say that the end product also becomes affordable, and the same goes for the iPhone.
The campaign of making in India is trending. By norms, whatever is made in India is acceptable to Indians. There’s no question of it being from a foreign land company, as long as some manufacturing is done in India. At least, this is what the critics have to say.
In India, those smartphone companies win, which provides the most performance with less cost. E.g., Xiaomi and other Chinese smartphone manufacturers are doing this, increasing Apple’s competition. Due to India’s current trade restrictions on China, Apple is set to leverage on it.
Apple is trying its best to lower the iPhone’s prices as much for the Indians as possible, but this seems a lot difficult for Apple. Hopefully, they will get around that too.
Why the US-China trade war is benefiting Apple to manufacture in India
The US-China trade war is by far the most crucial factor that will affect companies worldwide. And it’s going to cause a ripple effect across the economy of the entire world. If American companies are prohibited from doing any business with Chinese companies, then most of those companies will move their manufacturing plants somewhere else and which country looks the most lucrative, INDIA!
If all the companies started to invest in India, then contracts in India will be seriously inflated, causing companies to spend more for less. This has started to become a reality. That can be prohibited if companies invest early, and Apple knows this, so it invested a little in India. If the situation is right, then Apple should spend more, or it will be the one to pay more for less.
Apple will profit from the developing Indian IT industry.
India has an excellent IT industry that is serving the entire globe and has a national income of almost 173$ billion per year, with 4.36 employees. It is one of the top two sectors in India and is growing at a rate of 12 – 14 % yearly. We’ve done an in-depth analysis of this in our unique feature. Such a great force could help Apple greatly in the development of its OS besides its production in India. Hence, Apple is not looking to waste time before capitalizing for its global markets, using the Indian soil.
India is beneficial to Apple in many ways, but it only requires Apple to invest in India, which it is quite afraid to do due to its market conditions. With the new venture of Apple in India, thousands of people will get job opportunities. Only time will tell about the actions of Apple.