Here’s why Apple is faces challenges to boost India manufacturing

The technology giant from California has been shifting production away from China after the country’s strict COVID-related restrictions dented supply chains across industries and as trade and geopolitical tensions between Beijing and Washington escalated.

At a casings factory in southern India run by conglomerate Tata Group, only about half of the components from the production line are in good enough shape to be sent to Apple’s supplier Foxconn, FT reported, citing a person familiar with the matter.

This 50 per cent ‘yield’ does not meet Apple’s goal for zero defects, FT reported, adding that the company’s process of expanding in India has been slow in part due to challenges in logistics, tariffs and infrastructure.

Apple and Tata Group did not immediately respond to a request for comment.

Apple has bet big on India since it began iPhone assembly in the country in 2017 through Wistron Corp and later Foxconn, in line with the Indian government’s push for local manufacturing.

Last month, India’s trade minister said that Apple wants India to account for up to 25% of its production from about seven per cent currently.

To recall, Apple supplier Salcomp said on Monday that it is planning to more than double its workforce in India to nearly 25,000 over the next three years.

Sasikumar Gendham, managing director, Salcomp Manufacturing India in a statement to Reuters said “China Plus One strategy is at its peak at this moment … The whole supply chain is now kind of looking at an alternative. And India is poised to be one of the best alternatives.”

“It’s time to really diversify and decluster supply chain beyond China,” he added

Salcomp is a major supplier of chargers to Apple. Salcomp currently employs about 12,000 people in Chennai with 85% of them being women. It reached an agreement in 2019 to take over a facility, formerly owned by Finnish telecom equipment maker Nokia, in the southern Indian city of Chennai and started operations in 2020.

The Finland-based company said that it a, said Gendham.

Currently, iPhones are assembled in India by at least three of Apple’s global suppliers: Foxconn and Pegatron in Tamil Nadu; and Wistron in nearby Karnataka state.

(With inputs frpm Reuters)