Why Tim Cook is “very, very bullish and very, very optimistic” on made-in-India iPhones

Photo credit: iphonedigital.

Apple CEO Tim Cook is keen on making iPhones in India, a market on which he’s “very, very bullish and very, very optimistic.” His comments came during a conference call with analysts on Apple’s third quarter earnings.

Apple has already started a trial run of assembling the iPhone SE at a production unit near Bangalore in partnership with Taiwanese contract manufacturing company Wistron. Cook sees potential for India offering similar advantages to manufacturing as in China.

“We began to produce the iPhone SE there during the quarter, and we’re really happy with how that’s going. And so we’re bringing all of our energies to bear there. I see a lot of similarities to where China was several years ago,” Cook said.

A full-fledged manufacturing hub would be a win-win for both Apple and India. The iPhone costs higher in India than in most other markets because of customs duties. Apple has only 2 percent of the Indian market which is dominated by affordable Chinese smartphones.

Local manufacture could lower the price of iPhones and make them more attractive to an upwardly mobile urban population in India. Xiaomi – sometimes referred to as the Chinese Apple – has ramped up the production of its phones in India and seen big gains in market share.

See: Xiaomi makes 1 phone every second in India

But Apple has been negotiating with the Indian government for tax breaks to its suppliers as a prerequisite for setting up a manufacturing hub in India as an alternative to China. This requires a new policy taking into account the interests of other smartphone makers. Hence the delay.

Officials would be aware, however, that Apple making iPhones in India would be a boost to Indian Prime Minister Narendra Modi’s ‘Make in India’ campaign. The local supplier ecosystem for phone manufacture would get a huge boost, too, and so would developers of apps. Apple recently started an app accelerator in Bangalore.

Apple’s growing interest in India comes amidst a flattening out of its sales in China and rising costs of production there. “I don’t really know when that market will come back,” Cook said.

An intriguing comment from Cook, in this context, was on Apple’s workforce. “We have about two-thirds of our total employee base in the US despite only one-third of our revenues being here. And we’ll have some things to say about that later in the year.”

This comes after US President Donald Trump told The Wall Street Journal in an interview that Cook had promised to set up three “big, big, big” manufacturing plants in the US. Cook offered no comment on this during the earnings call.