Foxconn, Apple’s manufacturing partner is in talks to manufacture Apple’s iPhone in India, in a move that could lower the prices of the handset and encourage sales in the growing market.
India could help Foxconn lessen the increasing wage inflation in China, where it makes the majority of iPhones, and base production sites closer to markets where its main clients want to grow.
Foxconn can keep hold of Apple orders in the middle of an intense competition with smart manufacturing rivals such as Quanta Computer due to lower production costs.
According to Reuters, Foxconn is said to be looking to build iPads and iPods in India in addition to iPhones, for both local and international sales.
Subhash Desai, Industries Minister of the state of Maharashtra in India shared details on Foxconn’s alleged plans. “Foxconn is sending a delegation of their officers to scout for locations in a month’s time,” he said Reuters.
Foxconn has said it has plans to develop 10-12 facilities in India, including factories and data centres, by 2020, but the manufacturer gave no detail.
Historically, Foxconn has manufactured devices in China. However, in recent years they have shown interest in strategically extending around the world, to serve certain markets better. The company, for example, extended to Brazil in 2011 and manufactures some iPhones there, though ramp-up in the South American country has been moving at a slow pace than expected.
Both Apple and Foxconn view their expansion to India as a key strategic move that would allow the companies to counterbalance increasing wages in China. Apple has 10 percent market share in India. With lower production costs, Apple could also get more attacking with iPhone pricing in the country, where it is currently trailing behind South Korea’s Samsung and local Indian manufacturers like Micromax.
Apple has encouraged sales in India in the recent years through a number of different strategies, which includes partnering with resellers for retail storefronts as well as payment plans to lessen the up-front costs of buying an iPhone. The introduction of the larger-screened iPhone 6 and iPhone 6 Plus are also said to have evoked interest in India, though costs are believed to remain a restricting factor.
Apple is among the biggest clients for Foxconn – the trade name for Hon Hai Precision Industry Co Ltd – which also makes components for companies such as Sony, Xiaomi and Acer.
Sky Li, Vice President of phone manufacturer Oppo said “The smartphone boom in India indicates the time is just right to focus on expansion plans and increasing volume in India to a comparable level with the China market in the next five years.”
India has the second-highest number of mobile phone accounts behind China. There will be 650 million smartphones in the country by 2019, according to networking solutions company, Cisco Systems. By then, the number of tablets will rise 9 percent to 18.7 million.
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