Make in India: Apple says no to iPads and MacBooks – The Financial Express

The Financial Express
Maintaining that it is focused on manufacturing iPhones in India, Apple has declined to participate in the revised IT hardware production-linked incentive (PLI) scheme, government sources said. This means that for the time being, it has decided against manufacturing iPads and MacBooks in the country.
However, the government thinks Apple may change its stance in future, so it is likely that the revised scheme, currently in the works, will have an eight-year tenure instead of five or six years set for other PLI schemes. Of the eight years, companies will be able to choose any six to qualify for incentives after meeting the laid down targets. Government sources said that given this flexibility, Apple can even enter the PLI scheme two years later.
Also read: GeM: MSMEs sold 88% more goods to govt in FY23 from previous fiscal; seller count crosses 60 lakh
According to Apple, of its global turnover of $394 billion for the year ended September 2022, (the company follows the September financial calendar), iPhones contributed around $205 billion. It thus makes sense for it to deepen the production of smartphones in the country.
An Apple spokesperson declined to comment on an email query on the subject sent earlier last week.
The company faces another problem in producing iPads and MacBooks in India — it does not have a Taiwanese contract manufacturer for these products. iPads and MacBooks are manufactured by Chinese vendor BYD Electronic International.
Apple had initially contemplated manufacturing iPads and MacBooks in India and BYD was to set up a factory here in January 2021. However, it did not get permission to do so from the government, which has adopted a tough stance against investments by Chinese firms in the aftermath the Indo-China border clashes in 2020.
BYD has since set up an iPads and MacBook factory in Vietnam in September 2022, so it is not possible for it to set up a manufacturing unit in India even through a joint venture with an Indian partner.
The slowdown in demand for personal computers globally is another reason Apple may not be keen on participating in the IT PLI at this stage. Other global IT hardware players like HP, Lenovo, ASUS, and Acer have also suggested to the government to either defer the scheme for the time being or waive the minimum investment criteria.
According to estimates by IDC India, worldwide PC shipments declined 16.5% in 2022. During this period, the market in India grew marginally by 0.3% to 14.9 million units.
Also read: Government’s infrastructure push and its impact on the textile industry
For manufacturers, setting up bases in India at this point of time will not boost their exports; their existing factories in China, Thailand, and Vietnam are able to meet the demand at cheaper rates with a component supply chain already in place.
“Given the challenges that many companies face and the sharp decline in uptake of IT hardware products as the pandemic recedes, combined with the economic recession in the US and Europe — which, in turn, will also lead to a decline in demand for such products in India — the timing of the PLI scheme for IT hardware 2.0 may be misaligned with the global trends,” industry experts have conveyed to the ministry of electronics and information technology.
“Perhaps, it might be a better idea to hold off the scheme till things improve, rather than placing additional money in a scheme that has already failed once and could run into trouble again,” they have cautioned.
The first IT hardware PLI, which kicked off in April 2021, did not yield the desired results and, therefore, the government is designing a new one with modifications to the incentive structure. Under the existing scheme, only Dell and Dixon were able to claim the incentive at the end of the first year, while Wistron, Flextronics and Rising Star were not able to meet the incremental production and sales targets.
Even though the new draft scheme has reportedly increased the average incentive from 2.3% to 5.34%, Dell and HP, which have either direct or third-party manufacturing operations in India, have conveyed their discomfort to the government on a clause to commit a minimum investment of `700 crore.
Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.


Leave a Comment

Your email address will not be published. Required fields are marked *