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Apple Making iPhones in India? Company Closer To Setting Up Manufacturing Plant After Discussions With Government

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Apple’s back and forth discussions with the Indian government about setting up manufacturing operations in the country seem close to fruition. The company had met government officials on Jan. 25 to discuss plans to start manufacturing devices in the country.

“Apple’s decision on initial manufacturing in Bengaluru has further enhanced the reputation of Bengaluru as the most preferred destination for foreign investment and further validation of the State Government Policies aimed at fostering manufacturing, innovation and investments in Karnataka,” reported Forbes Thursday, citing a statement released by infotech department of the government of the Indian state of Karnataka.

Despite the statement, Apple has stopped short of confirming manufacturing plans in India. The company reiterated its statement given to Reuters on Jan. 25 that discussions are ongoing.

“We’ve been working hard to develop our operations in India and are proud to deliver the best products and services in the world to our customers here. We appreciate the constructive and open dialogue we’ve had with government about further expanding our local operations,” the company said.

As manufacturing in China gets expensive, Apple has been looking at setting up manufaturing units in other countires — India being its most preferred choice for the rising smartphone demand in the country. Other obvious advantages being the availability of skilled and cheap labor, economical manufacturing costs and IT expertise.

However, unlike China, India has rejected Apple’s demand for special concessions such as a 15-year tax holiday. Apple has also been slightly wary about the Indian government’s requirements of printing detailed packaging information on the back of the device.

The Indian government has already given the company a three-year grace period from the stipulation that foreign companies must buy at leat 30 percent of their components from within the country, but Apple is still pushing for import and manufacturing duties for its devices and components.

Apple does not manufacture its phones; rather it relies on manufacturers such as Foxconn for the same. The Taiwanese manufacturer Wistron is expected to make the phones in Bengaluru.

India is one of the world’s biggest smartphone markets and has a substantial demand for Apple products. iPhone sales in India were up 50 percent year on year in the fourth quarter of fiscal year 2016 in earnings results announced on Jan. 31.

Many brands including Xiaomi, Vivo among others have already set up operations in the country.