Tata Group wants to establish one of India's largest iPhone assembly plants, capitalizing on Apple Inc.'s ambitions to expand production in the South Asian country.
According to sources familiar with the situation, Tata intends to build the factory in Hosur, in the southern state of Tamil Nadu. According to the insiders who declined to be identified because they were discussing secret plans, the plant will likely feature approximately 20 assembly lines and employ 50,000 people within two years. The location is expected to be operational in 12 to 18 months.
Supply Chain Localization
The project would reinforce Apple's efforts to localize its supply chain and improve its collaboration with Tata, which already has an iPhone manufacturing in adjacent Karnataka state that it acquired from Wistron Corp. Apple is expanding its operations outside of China by collaborating with assembly and component manufacturing partners in India, Thailand, Malaysia, and other countries. A spokeswoman for Apple declined to comment, and a representative for Tata did not reply to a request for comment.
Going Beyond Typical Business Models
Other steps have been taken by the Indian conglomerate to strengthen its business with Apple and expand beyond its usual operations, which range from salt to software. It has increased hiring at its existing factory in Hosur, where it manufactures iPhone enclosures, also known as metal casings. Tata has also stated that it will open 100 Apple-focused retail outlets. Apple, for its part, operates two outlets in the country and plans three more.
Apple's key suppliers, like Taiwan's Foxconn Technology Group and Pegatron Corp., have increased their presence in India as a result of Prime Minister Narendra Modi's production-linked subsidies. In the previous fiscal year, Apple assembled more than $7 billion of iPhones in India, raising the country's portion of the device's production to around 7%. The rest are assembled in China, which made them all until a few years ago.
A Medium-sized Plant
The new plant will be mid-sized in comparison to other iPhone facilities across the world. It would most certainly be larger than Tata's Wistron acquisition, which employs over 10,000 people, but smaller than Foxconn's largest China operations, which employ hundreds of thousands.
Apple and Tata are likely to lobby the government to provide subsidies for the new facility, which is due to begin production just as previous government-backed financial incentives are set to expire.