Tata to take over iPhone plant as Apple plans India push. All you want to know

Apple iPhone
Apple iPhone

Indian Market
by 5paisa Research Team Last Updated: 2023-01-10T11:53:07+05:30

The Tata Group is close to taking over a major plant in southern India in a deal that would give the country its first homegrown iPhone maker, a Bloomberg report has said. 

What is the background to this potential deal?

The airline-to-software conglomerate has been in talks with the factory’s owner, Taiwan’s Wistron Corp., for months, and is looking to complete the purchase by the end of March, Bloomberg said. 

The two firms discussed various potential tieups but talks have now centered on Tata taking a majority of a joint venture, the report added. Tata is set to oversee the main manufacturing operation, with support from Wistron. 

Which companies have traditionally assembled iPhones? Why is this deal, well, a big deal?

Apple Inc.’s iPhones are mainly assembled by Taiwanese manufacturing giants like Wistron and Foxconn Technology Group. Tata’s deal would advance India’s efforts to create local contenders to challenge China’s dominance in electronics, which has been jeopardized by political tensions with the US and Covid-related hurdles.

How much will the manufacturing plant be valued at?

The acquisition could value Wistron’s only iPhone manufacturing operation in India at more than $600 million if the Taiwanese company meets the requirements to receive the expected incentives for the current financial year. 

What other deals has the Tata group inked with Apple?

Tata has taken other steps to increase its business with Apple. It has accelerated hiring in its factory in Hosur, near Bangalore, where it produces iPhone components. That plant stands on several hundred acres of land where Tata could add iPhone manufacturing lines in the coming years. Tata has also announced that it will launch 100 Apple stores in the country, the first of which is set to open in Mumbai this quarter.

Isn’t Apple also launching its own retail stores?

Yes. Apple is expected to launch two retail stores in India, first in Mumbai and the second in New Delhi, around April, a report in The Indian Express (IE) said. The company may take a whole floor in a prime mall or a "large space" at a high-street location for its stores. These may be spread over 25,000 sq ft.

The first store may come up in Mumbai's Bandra Kurla Complex (BKC) and the second in Delhi's Saket, the report added. The company had taken 20,000 sq ft space in BKC-located Jio World Drive in 2019. However, the plan to launch a store got delayed due to the Covid-19 pandemic.

How has Apple been operating in the country so far?

In India, Apple has been operating using third-party stores. These are unlike the flagship stores in New York and London. Customers can walk into these stores and buy the products. But additionally, the stores work to build relationships with loyal users. The stores, which are called "town squares", have people who specialise in tech and help the customers make a better choice. They also offer technical support.

Why is this move significant from a marketing point of view?

This is the company's latest push to improve its sales in India, where the iPhone is largely considered to be a luxury product. It has only a 5 per cent share of India's smartphone market, but is among the fastest-growing companies in the country. The research firm Canalys said Apple was the only leading vendor to grow by 8 per cent in the Indian market. Apple reached its highest Q3 market share in the country on the back of sales of the iPhone 13 and the newly launched iPhone 14 series.

India is not only a key player as a consumer but also as a producer. With Apple facing difficulties in China, where a large part of its manufacturing takes place, the company is looking to shift its base elsewhere. The company has already started producing the latest iPhone 14 in India.

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