Smartphone giant Apple is reportedly holding talks with the Indian government about manufacturing its products in the country, which is the world’s second largest smartphone market.
According to the Wall Street Journal (WSJ) the Cupertino-based company sent the government a letter last month outlining its plans and seeking financial incentives to move some production to India. The newspaper said senior Trade Ministry officials recently met to discuss the matter.
In September, media reports said Apple had approached Foxconn, its main supplier and the world’s largest electronics contract manufacturer, regarding producing iPhones in India within the next two to three years.
Indian Prime Minister Narendra Modi is said to have raised the issue of local production of iPhones with Apple CEO Tim Cook when they met in May, and now Apple is looking into the possibility in the longer term.
Complicating a move to local production is the country’s local sourcing rules, which require foreign firms with single-brand retail outlets to source 30 per cent of the sales value of their components from India within five years of starting operations.
In June the government reversed its decision the previous month not to ease local sourcing rules for Apple and granted the iPhone maker a three-year waiver on the requirement, which clears the way for it to open Apple Stores in the country. The reversal is part of a major reforms package of the country’s foreign direct investment policies announced by the head of the country’s central bank.
Apple currently lacks any branded retail stores in India, instead selling its devices through third-party resellers. However, the vendor plans to open at least three Apple Stores in the country by the end of 2017.
The US vendor isn’t in the top five in the market, where Samsung and local brands Micromax, Lava and Intex had more than a 50 per cent market share in Q3.
Smartphone growth in the country outpaced the global market in Q3 as demand for mobile broadband connectivity soars and operators rapidly expand their 4G network coverage. Shipments in India expanded 23 per cent during the quarter, according to Counterpoint Research. Nearly 70 per cent of the smartphones shipped were LTE models, with 80 per cent of those voice-over-LTE capable.