Tata's Proposal for a New iPhone Factory Aims to Accelerate Apple's Growth in India

08 Dec, 2023

Tata's Proposal for a New iPhone Factory Aims to Accelerate Apple's Growth in India

Tata Group is set to embark on a monumental initiative, proposing the construction of one of India’s largest iPhone assembly plants in the southern state of Tamil Nadu. This move aligns with Apple Inc.’s strategic intent to bolster its manufacturing footprint within the South Asian nation.

Located in Hosur, the proposed facility, as per insiders familiar with the matter, is anticipated to house approximately 20 assembly lines and is projected to employ a workforce of 50,000 within the next two years. The individuals, preferring anonymity due to the confidential nature of the plans, revealed the objective of commencing operations within 12 to 18 months.

This endeavor serves to fortify Apple’s endeavor to localize its supply chain, strengthening its collaboration with Tata. Notably, Tata already operates an iPhone factory, previously acquired from Wistron Corp., in the neighboring state of Karnataka. Apple’s strategy involves diversifying its operational base away from China, fostering partnerships for assembly and component manufacturing in countries like India, Thailand, and Malaysia.

While an Apple spokesperson chose not to comment on the matter, requests for comment directed to Tata representatives remained unanswered.

Beyond this colossal venture, the Indian conglomerate has been taking strides to amplify its association with Apple and extend its reach beyond its conventional sectors, which span from salt to software. This includes an accelerated recruitment drive at its existing Hosur facility, primarily engaged in the production of iPhone enclosures. Additionally, Tata has declared plans to inaugurate 100 retail outlets focusing on Apple products. Simultaneously, Apple has initiated two stores in India, with plans for three more in the pipeline.

The impetus for such expansions partially stems from Prime Minister Narendra Modi’s incentives aimed at boosting production, which have spurred major Apple suppliers like Foxconn Technology Group and Pegatron Corp. to escalate their operations in India. Consequently, Apple has seen a substantial uptick, assembling iPhones worth over $7 billion in India during the previous fiscal year, constituting roughly 7% of the device’s global production. However, the lion's share continues to be assembled in China, where, until recently, all iPhones were manufactured.

In terms of scale, the proposed plant is poised to be mid-sized in comparison to other iPhone manufacturing facilities worldwide. It is anticipated to surpass the Tata-acquired Wistron plant, which currently employs over 10,000 individuals, yet remain smaller than the colossal facilities operated by Foxconn in China, which boast employment figures in the hundreds of thousands.

As the anticipated timeline for the plant's production aligns with the expiration of prior state-backed financial incentives, both Apple and Tata are expected to seek government subsidies for this venture.