The Taiwanese contract manufacturer which makes Apple’s iPhone is in talks to set up factories in India in a move that could lower prices in the world’s No.3 smartphone market where Apple trails Samsung and local companies.
Foxconn Technology, the world’s largest contract electronics manufacturer, hopes that India could help it offset fast increasing wage inflation in China, where it makes the majority of iPhones, and base production sites closer to markets where its key clients want to grow.
Lower production costs could also help Foxconn keep hold of Apple orders amid intensifying competition.
“Foxconn is sending a delegation of their officers to scout for locations in a month’s time,” Subhash Desai, Industries Minister of Maharashtra, told Reuters.
Foxconn has said it is aiming to develop 10-12 facilities in India, including factories and data centres, by 2020, but had given no detail.
The Taipei-based tech giant declined to comment on detailed citing commercial sensitivity.
Desai said Foxconn had yet to make any firm commitment, but he said the group was looking to manufacture iPhones, iPads and iPods, both for domestic as well as global sales.
Apple representatives in India also did not comment.
Apple’s iPhone 6 with 16 GB sells for around 44,000 rupees (£442) in India, versus Samsung’s Galaxy S6 with 32 GB which sells for around 40,000 rupees (£402).
It has 10 percent market share in India, trailing Samsung and local manufacturers such as Micromax, which dominate the market, according to Research.
A return of Foxconn — which was forced to shut up shop in India last year after its client Nokia closed — would be a major victory for India, which badly needs to turn its tech boom into a manufacturing and employment boost.
India, under Prime Minister Narendra Modi, has sought to revive manufacturing, but the country is yet to rival China, particularly in technology where most factories will likely be assembly units to begin with.
But local businessmen are betting that as global companies invest in the country, suppliers will follow.
A lack of good infrastructure and suppliers are the biggest hurdles to making technology products in the country, forcing most of India’s more than 100 different phone companies to get their products from the mature markets of China and Taiwan.
Apple is among the biggest clients for Foxconn which also makes components for companies such as Xiaomi, Acer and Sony.
India has the second-highest number of mobile phone accounts behind China.
According to networking solutions company Cisco Systems there will be 650 million smartphones in the country by 2019.
The number of tablets will rise 9 percent to 18.7 million by then.