Apple moves closer to iPhone assembly in India, may manufacture in Bengaluru

Apple has been asking for sops from the Indian government to start making iPhones in India but the inter-ministerial panel that was specially created to look into Apple’s requests is yet to take a decision on the matter.

The government of the Indian state of Karnataka said on Thursday it welcomed a proposal from Apple Inc to begin initial manufacturing operations in the state, in a sign the tech company is slowly moving forward with plans to assemble iPhones in the country.

The government of Karnataka said on Thursday it welcomed a proposal from Apple Inc to begin initial manufacturing operations in the state, in a sign the tech company is slowly moving forward with plans to assemble iPhones in the country.

"Apple's intentions to manufacture in Bengaluru will foster cutting edge technology eco system and supply chain development in the state, which are critical for India to compete globally," the Karnataka government said in a statement.

A source familiar with the matter told Reuters, however, that no deal, or memorandum of understanding had so far been finalised with the Karnataka government.

Read: Apple says ready to make in India, govt considers relaxing norms

Apple has been asking for sops from the Indian government to start making iPhones in the country and as well as its own retail chain.

HT had earlier reported that the inter-ministerial panel, which has been constituted specifically to look into the company's claims for sops, saw Apple make its presentation in the last week of January and has is yet to take a decision on the matter.

However, Union finance minister Arun Jaitley in his budget speech announced a record figure of ₹745 crore under modified special incentive package scheme (MSIPS) to boost electronic manufacturing. In a caveat, the government also has proposed a 2% special additional duty on import of PCBs. PCBs or in simple words printed circuit boards makes up for 20-30% of a smartphone's cost and is generally imported as India still doesn't have fabrication units to manufacture them domestically.

The person, who asked not to be named, said if Apple did go ahead with plans to begin assembling the iPhone, it was likely to do so initially at a plant being set up by its Taiwanese manufacturing partner Wistron Corp at Peenya on the outskirts of the tech hub of Bengaluru, Karnataka.

Read: No sweetener for Apple to be a part of Make-in-India

Apple was not immediately available for comment.

Cupertino, California-based Apple, is keen to assemble its phones in India, one of the world's fastest growing smartphone markets.

Apple representatives met with central and state government officials in India last week, as it is lobbying hard for a raft of tax and sourcing concessions, before it begins to assemble iPhones in the country.

Following the meetings, Apple said it appreciated the open and constructive dialogue it held with Indian officials, around the expansion of its local operations in the country.

Read: Will iPhones get cheaper in India? Govt reserves decision for now

Any final decision around manufacturing in India however, is likely to still be contingent on the government's willingness to concede ground on the concessions sought by the company.

Last month, information technology minister Ravi Shankar Prasad said India would consider Apple's request for incentives to invest in the country with an "open mind."

On its part, the government of Karnataka said on Thursday it was "committed to new initiatives in any sector for manufacturing and will provide a conducive environment for investment."

(with Reuters inputs)