Apple plans to start assembling the iPhone in Bangalore by end April under a contract manufacturing arrangement with Taiwan's Wistron.
The move by the company comes even as it awaits approval from the federal government for some of its proposals for lowering the import duties on components and for creating an ecosystem of local manufacturers who can supply components for the smartphones, according to sources close to the situation.
The Karnataka state, of which Bangalore is the capital, has announced Apple’s intentions to make the iPhone in the city.
Priyank Kharge, state minister for information technology, confirmed on telephone that the company had been cleared to make the phones in Bangalore and said it was a validation of the state's industry-friendly policies. Having a leading tech company making its products in the state could also have spin-off benefits in terms of app development and work in the area of artificial intelligence by the state's highly-skilled manpower, he added.
Apple announced last year the setting up of a facility in Bangalore to assist developers on best practices and improved app design around its iOS platform.
The company has not been extended any special incentives by the state to assemble the phones in Bangalore, Kharge said.
Apple did not immediately comment. The company has been planning to make its phones in India as well as set up its own retail stores in the country to address the booming local market, which is expected to see higher demand for Apple devices because of the rollout of 4G networks. iPhone sales were up over 50 percent in the country in fiscal 2016 over the previous year.
Getting the price down by local assembly is critical for Apple as the market is very price-sensitive. In the third quarter, Samsung Electronics, followed by Chinese and Indian brands like Lenovo and Micromax, led the Indian smartphone market, according to IDC estimates, largely because they have been able to deliver their products at various price points.
Apple has tried to get the Indian federal government to allow it to import refurbished phones that it could sell at low prices, but that proposal has run into criticism from some sections of government because of the environmental consequences of bringing into the country end-of-life products. Assembling phones in Bangalore would help Apple meet local sourcing rules for single-brand, foreign-owned retail stores, thus giving momentum to this other plan of the company.