Apple, Samsung, Oppo, and Vivo could increase the production of smartphones in India

Besides Apple, other phone manufacturers looking to expand production thanks to the PLI change include Samsung, Foxconn, Oppo, Vivo, and Flextronics. The clause that valued imported plants and machinery at only 40% was said to be keeping Apple from moving production equipment from Foxconn and Wistron to India. Pegatron also could end up moving a significant portion of its iPhone production line to India. One official noted that “The irritants have been resolved.”

The government also agreed to include the smartphone industry in any discussions before making changes to the PLI. Companies allowed to take part in these talks must have already invested and started production in India. It’s all part of a plan to attract major smartphone manufacturers to India as the country hopes to expand the amount of exports out of India from under $3 billion now to $100 billion by 2025.

Foreign phone manufacturers over the five-year life of the PLI will receive incentives valued at 4% to 6% if they continue to produce high-end handsets (with freight on board over $200) valued at ever-increasing amounts over the life of the scheme. For example, in the base year, these companies will have to produce phones valued at $530 million over the amount manufactured in the base year. That increases to $1.06 billion over the base year production figure in year two, $1.99 billion in year three, $2.65 billion in the fourth year, and $3.31 billion in the fifth and final year.

And it is important to note that another change to the PLI scheme removes a clause that would have allowed the government to back out of paying the incentives (even if the companies met their targets) if the Indian government didn’t have the money for the payouts. Instead, a clause on Force Majeure has been added. This would allow the companies to back away from having to meet their targets during times of natural disasters such as the COVID-19 pandemic.

The incentives will be paid to both domestic and foreign phone manufacturers and $5.42 billion has been set aside for companies that will receive the incentives over the five-year period. Will Apple move a significant amount of its iPhone production out of China to India? It still will have to find a supply chain that delivers parts in the quantity and quality that Apple needs. Chinese companies that want to participate might need approval from India’s Ministry of Home Affairs.