No upsetting India's Apple cart as production to touch ₹1 lakh cr

Over the past three years, Apple has been ramping up its iPhone production in India and in this fiscal the company is going to touch Rs 1 lakh crore worth of manufacturing landmark, The Economic Times has reported. The target appears feasible after it achieved the Rs 60,000 crore mark in the first seven months, the report claimed quoting officials in the know of things.

In the unlikely event of the tech giant missing the mark this fiscal it will be by a whisker and the Cupertino-based MNC would certainly surpass the figure by the Q1 of FY25. The company is facing headwinds of lukewarm consumption in the western markets which is the only dampener that might wait in the turns of the road ahead.

Manufacturing for Apple in India is carried out by Taiwan’s Foxconn and Pegatron. These two units are located in Tamil Nadu. The third production facility belonged to Wistron that the Tata group has taken over. It is based in Karnataka. The se units manufacture iPhone models 12, 13, 14 and 15.

Close to three-fourths – 70% actually – of the iPhones manufactured in India are shipped abroad. Therefore, the company has exported Rs 40,000 crore ($5 billion) worth of iPhones in six months between April and October in FY24.

Significantly, in the full year of FY23, the company had exported $5 billion worth of iPhones that were manufactured in India, thereby becoming the first standalone brand that had been shipped out in excess of the $5 billion mark.

Therefore, by all accounts, the growth in manufacturing and exports in FY24 has been tremendous. This year Apple has so far recorded 185% year-on-year growth in exports in the first seven months between April and October. During April-October last year, it had exported Rs 14,000 crore worth of iPhones.

While Apple did not reveal production-related details, Navkendar Singh, associate vice president, client devices & IPDS, IDC India said, “This healthy export numbers are in line with Apple’s focus on India as a market and, more importantly, making India as its important manufacturing and export hub, in the medium to longer term.”

“Apple is already assembling non-Pro iPhone models in India. The production of such high-volume models is the reason for such healthy production figures of Rs 60,000 crore. As Apple gets more confident about India’s manufacturing prowess, these numbers will see exponential growth,” Singh added.

In the second week of November, the Tata Group signed a deal with Wistron Hong Kong to acquire 100% equity stake in Wistron Infocomm Manufacturing (India) Pvt Ltd. Thus the Tatas became the first Indian business to join the Apple manufacturing machine. The Tata-Wistron deal was valued at $750 million.

The iPhone manufacturers are incentivised by the PLI scheme.

For iPhone manufacturing Apple has been steadily increasing its focus on manufacturing in India. The company began exploring manufacturing skills in this country since 2018-19. It began testing the Indian production processes with a small number of iPhone SE, 7 and 8 models.

The report stated that while Apple spent the years between 2018 and 20 testing Indian assembling skills, it began serious manufacturing from 2020-21.

Production zoomed from Rs 16,750 crore in 2020-21 to Rs 60,000 crore in just seven months of 2023-24.

Market observers think that the company is already benefiting from the trend of Indian consumers buying more and more premium products. The company is expected to sell a record 90 lakh to 1 crore iPhones in this country in 2024 compared with less than 7 million in 2023.

This stands is contrast with its home market in the US where Apple is preparing to meet the festive demand but might face headwinds of lukewarm demand.