14 Chinese suppliers to Apple get nod to Make in India via JV route

New Delhi: The government has given preliminary clearances to several of Apple’s Chinese suppliers, allowing them to form joint ventures with Indian companies to set up facilities here, as it seeks to expand the local value chain in iPhone and electronics manufacturing.

Fourteen companies from a list of 17 Chinese suppliers that had approached the gov-ernment have received the initial clearance, officials aware of the matter said. These companies, which include Luxshare, Sunny Optical, Han’s Laser Technology, YUTO Packaging Technology, Strong, Salcomp and Boson, supply components to other smartphone and electronics brands as well.

The government has clearly stated that these Chinese firms would not be allowed to set up their wholly owned entities in India and that they must form JVs with local compa-nies, the officials said. The final approvals to start manufacturing will be given at a later stage, after the JVs are formed.


Apple did not respond to an email seeking comment about the Indian government’s decision.

'Initial Talks on with Local Cos'
“We want Indian champions to emerge in the supply chain and that will happen when Chinese majors partner with local firms. Full due diligence will be done while giving approval so that the interest of India is not hurt,” a government official told ET.

The main reason for the government to make this decision was the realisation that local value addition must rise for self-sufficiency in electronics manufacturing, the official said.

Without the participation of Chinese companies, it would be extremely difficult and time-consuming to develop a manufacturing ecosystem for Apple products in India. “The importance of expertise is necessary, and China is the main link in the global elec-tronics manufacturing ecosystem,” said a second official. “China has been Apple’s mother factory and if the success can be replicated here, the suppliers have to come.”

The local value addition in iPhone manufacturing is currently around 18%, and with the partners coming in, that could likely go up to 50%, an industry executive told ET.

For example, Luxshare Precision is one of the top contract manufacturers for the US company and makes Apple Watches, AirPods and iPhones. Sunny Optical makes camera lenses for iPhones. In May 2020, Luxshare had signed a deal with the Tamil Nadu gov-ernment to take over the shuttered Motorola phone manufacturing unit in the state and invest around Rs 750 crore. The central government has yet to clear the proposal. ET reported in its October 28 edition that the Tamil Nadu government was urging the Cen-tre to hasten the approval.

An industry executive said the Chinese suppliers were already scouting for partners in India and were in initial talks with as many as 50 local companies, including the likes of the Tata Group, Lava International and TI India. On October 22, ET reported Lava was in advanced talks for a joint venture with Shanghai-based Huaqin Technology, the world's largest original design manufacturer for mobiles and tablets.

In the past, the government had rejected proposals from several Chinese component suppliers, primarily of smartphone maker Vivo, that wanted to enter India with a 100% stake.

Apple currently assembles iPhones in India through three Taiwanese contract manufac-turers: Foxconn, Wistron and Pegatron. All three have approvals under the government's production-linked incentive scheme for smartphones.

Another industry executive said the Chinese suppliers who enter India through joint ventures would also be eligible to participate in the upcoming PLI scheme for compo-nent manufacturing.

“Development of the supply chain of the most valuable company on the planet is both challenging and profoundly satisfying,” said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association.

It is challenging because the top and emerging manufacturing countries are fiercely competing for this supply chain, he said. “The most satisfying result out of it would be development and integration of Indian companies in joint ventures in the global value chains.”

India currently imports sub-assemblies such as memory chip, camera module, processor IC, LCD assembly, die cut parts and chargers/adapters, which form around 80% of the bill of materials, according to data provided by the Manufacturers Association of In-formation Technology.

Business has been booming for Apple in India, which features prominently in the smartphone major’s plans to diversify its manufacturing reliance away from China.

India in fact has been one of the consistent growth markets for Apple, with double-digit revenue increases reported in Apple's most recent filings. The US technology giant is expected to report record shipments in 2023, surpassing the record roughly 6 million it is likely to have shipped in 2022.

It exported iPhones worth more than $2.5 billion from India during April-December last year.