Commentary
Critics Of PLI Take Note: India Is Now Slowly Moving Beyond Simple Assembly Of Phones
Apple is betting big on India and is moving a substantial part of its supply chain away from China.
India's efforts to kickstart a full-scale manufacturing ecosystem with the production linked incentives (PLI) scheme appear to be making headway: companies are now looking beyond simple assembly and are showing interest in manufacturing high-value components within the country.
News reports indicate that Apple is speaking to multiple vendors to begin making critical subcomponents — such as high precision camera and lens assemblies.
Analysts say that these sub components would easily constitute nearly 15 per cent of the overall value of the phone.
The company is in advanced talks with components maker Aequs Group (India) and lens maker Rayprus Technologies, a subsidiary of Taiwan’s Foxconn, to produce the camera and lens assemblies within India.
Aequs is known for its expertise in manufacturing high-quality toys, consumer durable goods, and aerospace parts. Rayprus Technologies specialises in producing high-quality precision camera and lens solutions.
Rayprus, stands as one of the global leaders in producing multi-camera modules for smartphones and is among the select few suppliers of this technology that are not based in China.
These developments are good news for the Indian manufacturing sector — it shows that the PLI scheme offers a pathway from simple assembly to sophisticated component manufacturing, within the country.
This process will only accelerate with time as ecosystem players choose to bring more and more manufacturing closer to assembly.
Such developments will also have second order effects: other companies will also be able to leverage the talent and industrial capabilities developed within the country, to make their own products and sub-components in the near future.
Critics such as the controversial economist and former Reserve Bank of India Governor Raghuram Rajan, had earlier sought to criticise the government about overpaying large subsidies for low value addition assembly line work.
If Apple's efforts bear fruit and if other brands follow suit, we will have seen PLI sowing the seeds for high value manufacturing of sophisticated consumer electronics components — something India desperately needs, given its large import bill for electronics.
Apple has actively leveraged India's PLI scheme for mobile devices. The company's vendors assembled iPhones with a freight-on-board valued at over Rs 60,000 crore in the initial seven months of 2023-24 (FY24), through its three vendors in India.
Foxconn, Pegatron, and Wistron are the three vendors involved in the assembly of Apple products within India.
While Foxconn and Pegatron have factories in Tamil Nadu, Wistron (now under Tata Electronics' ownership) operates in Karnataka.
The production involves iPhone models 11, 12, 13, 14, and the latest addition, the iPhone 15. Both Foxconn and Wistron were among the first to file for claims under the PLI scheme, having met the incentive targets for FY23.
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