iPhone assemblers Foxconn, Pegatron, and Wistron will take part in the Indian government’s electronics production subsidy program, reports Bloomberg. New Delhi launched a $6.6 billion incentive initiative to bolster the region’s technological manufacturing capacity in June.
Together, the three Taiwanese microelectronics companies are responsible for making the majority of Apple’s handsets.
Updates on India’s Production Linked Incentive Program
According to Bloomberg, the Indian government will officially announce Foxconn, Pegatron, and Wistron are joining the Production Linked Incentive Program (PLI) on Wednesday.
The initiative will provide subsidies totaling 4 to 6 percent of a manufacturer’s electronics sales for five years.
However, the three companies must abide by specific rules to receive the support of the Indian government. For example, PLI beneficiaries must commit to developing and producing a certain number of $200 handsets.
The selected companies already have a production presence in the region. Foxconn and Wistron maintain iPhone assembly facilities in the South Asian country while Pegatron announced plans to build a facility in the republic in July. Insiders noted the latter firm’s new factory would be covered under the PLI if New Delhi approves its application.
Icing on the Cake
In a way, the Indian government’s electronics manufacturing support initiative will be the icing on the cake for the three device assemblers.
The iPhone maker reportedly plans to move around a fifth of its production capacity from China to India by 2025. The Cupertino, California-based company has sought to diversify its supply chain for years to avoid Sino-American trade war-related tariffs. India, with its highly skilled labor pool and positive U.S. relations, makes for an ideal new production hub.
Foxconn, Wistron, and Pegatron would have opened new factories in the South Asian country to meet Apple’s needs. All three firms want some of the $40 billion the smartphone company is spending to increase its India-based production capacity. Because of their business priorities, the PLI will make the three manufacturers’ plans more achievable.
The Indian government’s financial incentives could also help them convince iPhone parts suppliers to establish local complexes.
Significant Return on Investment
While the Taiwanese microelectronics firms will benefit significantly from the PLI, the initiative will provide even greater returns for India.
New Delhi’s new electronics production subsidies will bring an estimated $150 billion to the country over the next five years. In addition, Credit Suisse, a global investment company, noted India could increase its share of the worldwide handset manufacturing market by 10 percent during the same period.
New Delhi created the PLI as part of a broader initiative to build a $1 trillion digital economy in India by 2025. However, the nation’s officials will need to revise their timeline projections up given the way things are going.