India’s Tata Group readying $1.5bn components factory for Apple, others

Tata Group Apple
Tata Group logo courtesy Tata Group

Tata Group is expected to emerge as the key Apple partner in India with a $1.5 billion electronics component factory in the southern state Tamil Nadu. The factory is a part of the conglomerate’s strategy to build new-age businesses.

The group’s wholly-owned subsidiary, Tata Electronics, is leading the initiative and is currently engaged with the iPhone maker. The subsidiary has already been allotted 500 acres by the Tamil Nadu Industrial Development Corp. (Tidco) in Hosur.

According to a report by the Economic Times, the Tamil Nadu factory will start operations soon and manufacture iPhone casings.

The report said that Tata Sons is currently seeking up to $1 billion in overseas loans to set up this factory. The factory could see a capital expenditure of $1.5 billion through a combination of internal accruals and borrowings.

The factory will not be limited to just Apple, and will also cater to original equipment makers (OEMs) from South Korea and Japan. The report said that the “scalable” factory will also look at manufacturing smartphones along with contract manufacturing for mobile components.

Tata group chairman N Chandrasekaran is currently involved in devising a full-fledged strategy to build high-growth new businesses in areas like lifestyle, electronics, financial services, education and healthcare, among others.

The group is also preparing a new single platform, namely super app, which will put together its varied offerings. The so-called “super app” is expected to be launched by January 2021.

With the factory, the Tata group is trying to attract multinational mobile ecosystem players, including Apple seeking alternative production sites in India.

“This [factory] offers high growth potential for the group provided the execution is done well and by roping in top management with expertise in this area. The group is identifying the right CEO to head this venture and also roping in directors from GE,” a group director was quoted as saying by the publication.

The latest partnership will also allow Apple to quickly shift a part of iPhone production away from China and reduce its dependence on the country. The company’s plan to set up a complete smartphone manufacturing ecosystem in India is already gathering pace with around nine partners entering during the pandemic to help the iPhone maker.

Key Apple suppliers – Foxconn, Wistron and Pegatron – were among the 16 firms approved by the MEITY for the $6.65 billion PLI scheme aimed at boosting domestic smartphone production over the next five years.

Apple’s cable and connector supplier, Cheng Uei Precision Industry Co, has also entered India, and will soon begin mass production in Tamil Nadu, which also houses Foxconn’s iPhone facility.

The Tata factory is expected to take advantage of the government’s production-linked incentive (PLI) scheme unveiled in August. A separate report by news wire service PTI said that the group has already reached out to the country’s Ministry of Electronics and Information Technology (MEITY) seeking incentives.

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