Apple mulls expansion of manufacturing to India

India is expected to overtake the US this year to become the second-largest smartphone market, behind China, and Apple wants to be poised to be ready for that growth opportunity. While Apple does own 60% of the high-end (US$450 and above) phone market in India, that only accounts for about 3% of the overall market. According to research firm Counterpoint, 70% of the smartphones in India cost less than US$150, and thus quite a large market that Apple is missing out on.

Part of Apple's strategy will be reducing the cost of their products for sale in the world's second-most populous country. One method for this is to start manufacturing those products in India. Apple has been eyeing Bengaluru, India as a place to start manufacturing iPhones. If the iPhones are made in India, it will reduce costs (imported goods are subject to a 12.5% duty). 

According to sources, Apple seeks "full duty exemption on manufacturing and repair (raw materials), yield loss on inputs, components, capital equipment (including parts), and consumables for smartphone manufacturing and services/repair for a period of 15 years for both domestic and export markets”. If the government concedes to these demands, however, they will then be obligated to provide them for other foreign companies as well.

Apple has been in negotiations with the government for at least a year. During last last year,'s visit, it is reported that Cook sought to import and sell refurbished phones—a plan that was rejected by Modi. If both sides are to negotiate a mutually amicable agreement, it will probably take some time.