Apple recently announced that it will begin assembling its iPhones in India through local Foxconn. Pegatron, Apple's contract manufacturer, also plans to begin their operations in three countries including India. The promising 1.3 billion consumer market in India attracts businesses as companies find ways to avoid the risks brought upon by the on-going trade conflict between China and the United States.
The Taiwanese Foxconn that makes a range of things from smartphones to robots for known international and Chinese companies announced in filings to the Taiwan Stock Exchange that they acquired land-use rights and signed a deal amounting to &U.S. 213.5 million with a subsidiary in India.
Pegatron, a Taipei-based company that assembles almost 30 percent of Apple's products also announced that they are planning to build manufacturing outlets in Indonesia, Vietnam, and India. Pegatron President SJ Liao said that they will announce a concrete plan for Vietnam soon. He also added that the pace of their expansion depends on the trend in the U.S.-China trade war.
The two companies' decision aims to diversify their production beyond China. Most of the multinational technology brands are experiencing hardships as the two economic giants slap each other with tariffs. The imposed tariffs placed pressure on companies to relocate their production away from China.
Currently, the demand for smartphones in India ranks it as the hottest market for smartphones in the world. However, the high cost of iPhones might face an uphill battle in terms of sales in India's 2 percent smartphone market.
The tech giant faces a rough road ahead in the country's market because of the tariffs on imported smartphones, Apple store ban in India, and the weakening of Indian Rupee against the U.S. dollar. The new manufacturing outlets in the country might resolve the growth contributing factors.
Samsung and Xiaomi are currently dominating India's consumer market for smartphones. The two companies sell quality phones at affordable prices. Both companies have manufacturing operations in India.
Apple's move will allow the company to avoid heavy import taxes on its iPhones which might lower the prices of its phones for Indian customers. The company usually sets its iPhone price based on added taxes and the strength of the local currency over the U.S. dollar. Last year the brand increased its iPhones prices because of the imposed tariffs that are from 15 percent to 20 percent. Analysts from Fitch Solutions, a research firm, noted that the assembly of iPhones in India is important for Apple as it seeks to grow revenues in the Indian market.
