Apple Contractor Wistron Corp Starts Assembling iPhone SE In India

Apple contractor Wistron Corp. completed its first run of assembling iPhones in the country, a part of Apple’s effort to gradually get rid of its dependency on China for manufacturing. The company will be assembling its cheapest iPhone — the iPhone SE to cater to the local market’s demands for budget devices, The Wall Street Journal reported Wednesday.

According to the report, iPhone SE will be made in the South Indian state of Karnataka and the company will start shipping India-made devices soon.

R.V. Deshpande, commerce and industries minister for the country’s southern state of Karnataka, said. “Apple coming to India is a [matter of] pride for us. We are trying to get them in Karnataka as it’s the right place with all the required ecosystem.”

Read: Apple's ‘Make In India’ Plan Hits Hurdle: iPhone Maker May Not Get Tax Concessions

While Apple and Wistron declined to comment on the development, Faisal Kawoosa, principal analyst at research firm CMR said, “Apple is likely to sell a good number of iPhones if it prices them so aggressively. In three to five years, these users will be able to graduate to a standard-priced iPhone.”

In a statement to the Journal, Apple said that the initial production of the device has begun and the first such devices might land on the shelves as soon as this week or the next. The cost of an India-made iPhone is no yet known. The device currently sells in India for $320 — $79 less than its price in the U.S. The Journal expects India-made iPhones to cost at least $100 less, which would be closer to the $150 average smartphone price in the country.

Apple and the Indian government have been in talks regarding manufacturing in the country since January. They have gone back and forth over Apple’s demand for tax incentives. While the government has waived off the requirement to source parts locally, it has rejected the company’s demand for a 15 year tax holiday on manufacturing.

Read: Apple (AAPL) Stores Coming To India? New Foreign Investment Rules Make It Easier

Assembling iPhones in India is a way for the company to appeal to the local market in accordance with the Indian Prime Minister Narendra Modi’s Make in India policy.

Moreover, it could help Apple to price-conscious Indian customers. Over a period of time, India might turn out to be a possible alternative to China, since it is turning into a manufacturing hub of sorts for brands such as Xiaomi, Vivo and Oppo and has a whole supply chain, along with skilled labor specializing in making phones.

But the biggest appeal is the country’s domestic market, one of the largest in the world — despite the premium pricing of its products, Apple clocked a billion dollar in sales last year, which explains the company’s eagerness to invest in the country. The smartphone market grew 18 percent in the country last year, which is staggering in comparison to a 3 percent global average.

Apple currently holds a 3 percent market share in the Indian smartphone market, which hasn’t grown since 2012.