The COVID-19 led lockdown has disrupted the supply chain in China. The US President Donald Trump has been vocal about accusing China of the virus outbreak. This has further increased the trade tension between the US and China. As a result, American manufacturers are looking at shifting their base from China to other countries.
The Indian government is pro-actively reaching out to these companies to shift their operations. Reports suggest that Apple’s likely to shift the operations to India. There have been several meetings between Apple’s senior executives and top-ranking government officials over the last few months. This has paved the way for Apple to examine the possibility of shifting 20% of the production capacity from China to India.
The move will help Apple to scale its local manufacturing revenues, through its contract manufacturers. Apple is likely to shift $40 billion over the next five years. The decision is in line with India’s production-linked incentive (PLI) scheme, which is designed to boost local manufacturing of electronic products.
In order to avail the PLI scheme, the company has to manufacture at least $10 billion worth of smartphones between 2020 and 2025. Apple already sells $1.5 billion worth of smartphones in India. Less than $0.5 billion of those are manufactured in India. In contrast, Apple produced $220 billion worth of products in China.
While India is not a big market for Apple from sales figures point of view, the company is looking for a bigger slice of global exports market from India. Manufacturing here may not be as economical as China, but it is better than moving it to Japan or the US.