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India’s Tata joins Apple’s exclusive iPhone-manufacturing club

It’s not just retail stores Apple is opening in India. One of the nation’s biggest industrial giants, Tata Group, has joined the world’s exclusive group of iPhone manufacturers and is expected to begin building iPhone 15 and iPhone 15 Plus series devices in India later this year.

India takes a seat in the iPhone club

Beyond smaller components, this is the first time Apple has begun working with an India-based company on iPhone manufacturing at this level. Existing partners Foxconn Technology Group, Pegatron Corp, and Luxshare Precision Industry are based outside the nation.

The move follows Tata Group’s acquisition of Taiwanese firm Wistron Corp’s factory in India following months of negotiation. The decision to sell up may reflect a difficult event in 2020 when violence broke out at the Wistron factory in India over working conditions.

However, the intensity with which Apple is focusing on diversifying its supply chain extends to all the company’s suppliers, with Foxconn recently announcing plans to invest $500 million in Telengana, India. (Apple and partners are also investing in manufacturing facilities elsewhere in Southern Asia, including Thailand, Vietnam, and elsewhere.)

The aim is to build a multi-point supply chain that becomes more resilient to shocks such as COVID-19 and continued political turmoil.

Citing a claim from TrendForce, the South China Morning Post tells us the new manufacturer will be contracted to build a small number of Apple smartphones initially, with that number set to increase in future years.

Production at a global scale

Shifting a supply chain at this scale has a profound impact. Foxconn’s investment, for example, is expected to create 25,000 jobs at first, a number that will increase as the quantity of Apple devices made in India grows.

JP Morgan has predicted that India may account for as much as 25% of all iPhone production by 2025. At present, India’s iPhone manufacturing sector makes around 7% of iPhones and employs roughly 63,000 workers.

The effort has taken years and even now Apple, India’s government, and local states are negotiating hard to introduce new working rules to enable changes such as women’s on-site factory dormitories and 12-hour workdays. That’s not possible under current regulations, which seek to protect workers against exploitation.

Many of these rules were recently changed in a national Factories Act, but local states including Tamil Nadhu appear to want to withdraw from those amendments under pressure from unions and political parties.

Given the resistance to those rules, it’s possible the Act may be revised to cover only certain sectors, specifically iPhone assembly. Apple vendors employ around a million workers in China, so there’s a plenty of economic motivation to strike that balance between multinational profit and local human need.

India’s economy is growing quickly

India is a growing economic powerhouse that already eclipses the UK as the world’s fifth biggest economy. The analysts at Wedbush recently said Apple could generate an additional $20 billion each year in revenue through its work in India by 2025, anticipating further growth after that.

Speaking to the depth of the relationship between India’s government and Apple, Commerce and Industry Minister Piyush Goyal has said, “We are in regular touch with them…. We hand-hold them because in a way, the eyes of the whole world are fixed on Apple.”

“All of these things bode well for India’s future, and we want to be a part of it,” Apple CEO Tim Cook said during his most recent trip to India. “We want to be a part of it for all of ourselves, not not just a part of it, from a marketing point of view.  I can’t stress enough. We are all in…. India over time will be one of Apple’s largest markets…, the scale will be enormous…. India is at a tipping point.”

Investment beyond manufacturing

Apple confirmed record results in the nation during its most recent fiscal call.

Supporting this growth, Apple is investing in new office space in India’s Silicon Valley in Bengaluru, and recently changed its global sales structure to help prioritize and accelerate local decision-making there. Apple’s India leadership is now two phone calls away from Cook, and the company has also begun investing in environmental and social projects in the country to help meet its target for a carbon neutral supply chain.

With so much in play, it’s of little surprise that big manufacturing companies such as Tata Group are seeking to take space in Apple’s business.

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Copyright © 2023 IDG Communications, Inc.

This story originally appeared on Computerworld

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