The company appears to have used the PLI scheme to its utmost advantage and given the federal government something to gloat about
An Apple a day keeps the doubters at bay! Pardon our facetiousness on a matter that’s mission critical to India’s growth story. Now that you’ve gotten past the bad joke, what got us excited were reports of how Apple created 100,000 direct jobs in India over the past 18 months through smart use of the federal government’s PLI scheme.
In fact, it’s not just the story of Apple’s offshoring success that would’ve got the current regime grinning from ear-to-ear but the fact that it could serve as a playbook for other global giants seeking to set up manufacturing bases. In fact, just yesterday, we had pointed out how bulk chemicals could be one area that requires a similar production-linked incentive (PLI) scheme.
The Apple success story thus far
A report published in the Business Standard said Apple’s manufacturing partners and component suppliers had contributed to creating more jobs and even on the export front by creating about 25% of all its iPhones in India. Its vendors – Foxconn, Pegatron and Wistron – have collectively created 60% of all the new jobs, which is 7,000 more than committed.
The rest of the jobs were created by Apple’s extended ecosystem that includes component and accessory makers. These include Tata Electronics, Salcomp, Foxlink, Japil, Sunwoda and others, who added another 40,000 jobs during the 19-month period since the government’s second PLI scheme was initiated in August 2021.
The report, which quoted extensively from data provided by the iPhone manufacturers to suggest that while Foxconn created over 35,000 jobs in Tamil Nadu, Pegatron had 14,000 additional jobs (also in the same state). Wistron generated 12,800 jobs in neighboring Karnataka during the period.
And there’s more coming on the Apple front
We had earlier reported how the government had afforded initial approvals to several Chinese players so that they can set up manufacturing facilities in India under joint venture with Apple vendors. Looks like the government is also keen to further expand the local value chain for the iPhones in India, besides of course other products from the Apple store.
As many as 14 companies out of the 17 Chinese suppliers have approached the government for clearances and most of these have been accorded approvals, the report said quoting unnamed officials. Some of the names that came up include Sunny Opticals, Han’s Laser Technology, Yuto Packaging, Salcom and Bozon among others.
India’s export revenues from handsets appears set to cross the $9 billion mark by end-March and more could be on the anvil as Apple is considering MacBooks, iPads and AirPods manufacture at its Indian plants. Towards this end, the government may hike the PLI spends for IT equipment to Rs.20,000 crore from Rs.7350 crore as it stands today.
In fact, the government wants the Apple ecosystem to grow in India so that it moves ahead of its stated China-Plus One strategy for global product sourcing and supply chains. A plan of action is being reviewed by the Finance Ministry and other nodal ministries. The government had approved the PLI proposal in February 2021 guaranteeing between one to four percent incentive support for four years. The new scheme seeks to enhance this to five per cent. Additionally, laptops come under the ITA-1 which makes imports duty-free, unlike smartphones which have a 20% import tariff attached.