Apple plans to shift 20% of production capacity from China to India, eying $40 billion export revenue

Apple plans to shift 20% of production capacity from China to India, eying $40 billion export revenue  |  Photo Credit: PTI

New Delhi: Amid the coronavirus pandemic which originated from Wuhan, several companies are looking to move out of China. Tech giant Apple is planning to shift nearly one-fifth of its production capacity from China to India. As per reports, Apple's senior executives and Indian government's top-ranking officials have discussed the move over the last few days. 

The iPhone makes is currently looking to scale up its local manufacturing revenues. Amid the pandemic, Apple is seeking alternatives to China for shifting its production. An official familiar with the matter told Economic Times (ET) that Apple is looking to scale its local revenue to $40 billion over the next five years.

"We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, availing the benefits under the production-linked incentive (PLI) scheme," the business daily quoted a senior government official as saying,

Government's PLI scheme:

Because of the coronavirus crisis, several companies are looking to move out of China. In fact, Japan has announced a $2.2 billion monetary support for its businesses to shift its manufacturing and production out of China. The US is expected to do the same. India is hoping to attract some of these global companies looking to shift from China. In March, the government had notified three schemes with incentives totalling Rs 48,000 crore to boost mobile phone manufacturing in the country. The dominant production-linked incentive (PLI) scheme has a share of close to Rs 41,000 crore with sops to be spread over three years. 

Apple likely to become India's largest exporter:

It is worth mentioning that if this materialises, Apple could become India's largest exporter. The financial daily citing sources close to Apple mentioned that there were some irritants in the PLI scheme which still need to be sorted out. 

The person told the publication, "There are some problems with some of the clauses. For instance, valuing the entire plant and machinery already in use in its plants across China and other places at 40% of that value and the extent of the business information sought under the scheme are some of the irritants."

It is worth mentioning that currently, Apple sells phones worth $1.5 billion (appx) in India, of which less than $0.5 billion is locally manufactured. It has a market share of some 2-3% in the country. In contrast, Apple is a top investor in China. In fact, it produced merchandise valued at $220 billion in China in 2018-19, of which it exported goods worth $185 billion. The company, directly and indirectly, employs over 4.5 million people in China.