Apple-supplier Wistron starts expanding India plant

Taiwan-based contract manufacturer Wistron Infocomm has started carrying out a significant expansion of its existing facility in Kolar near Bangalore as Apple Inc continues to source more assembled-in-India iPhones.

The information was revealed in a regulatory filing related to an order win by air conditioning equipment provider Blue Star today.

“Wistron is a Taiwan based contract manufacturer of electronic goods and is one of the major manufacturers of iPhones for Apple. Wistron has been producing Apple devices at its existing factory at Kolar, Bengaluru, and has now embarked upon its Phase II expansion as a part of which, it is constructing a large manufacturing block and an IT building,” Blue Star said.

The order is for an air conditioning and ventilation system of 4000 ton capacity, electrical works, a fire-fighting system, plumbing, a compressed air system and a building management system.

The ramping up of Wiston’s facility in Kolar comes in the wake of a major push by the Indian government to cut down India’s electronics imports bill, which runs into hundreds of billions of dollars and accounts for more than half of the total non-oil imports made by India every year.

Wistron is one of the three Apple suppliers who reportedly plan up to invest close to a billion dollars under Government of India’s new Production Linked Incentive scheme for manufacturers.

According to a Reuters report, Wistron plans to invest around Rs 1,300 cr to expand its capacity from around 200,000 per year to 400,000 per year, creating an extra 10,000 jobs in the country.

Under the PLI scheme, companies get back as incentive from the government between 4-6% of the value of the incremental production they achieve under the scheme.

In other words, if a company used to make phones worth Rs 10,000 cr a year, and under the scheme, it increases its production to phones worth Rs 15,000 cr, it will get Rs 200-300 cr per year as incentive from the government.

For foreign players like Wistron, the scheme is available only to those phones priced above $200 per piece.

The scheme is designed to reduce India’s dependence of imported electronics, particularly on China.

Besides, manufacturers will also save another 10% or so in costs by way of lower import tariff, as finished phones are charged a higher import duty compared to components.

All this, however, is only likely to lower India’s electronics import bill by around 30% or so, because the country does not have factories that make smartphone chips/processors, memory chips or displays.

Most of the manufacturing that will be done in India will be focused on low-value products like chargers, plastic components/bodies, and in some cases, the printed circuit board.

For consumers, the expansion of local production is likely to mean a reduction of around 20% in the price of iPhones in India.