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    Apple supplier Pegatron board okays initial $150 million investment in India: Report

    Synopsis

    Pegatron’s factory in India is expected to start production in the second half of next year or in early 2022 and the company plans to make more investments in India over the next two years, CEO Liao Syh-jang had said in an investor conference last week.

    As for Pegatron, it must individually produce handsets worth Rs 4000 crore in its first year which begins in March 2021 under the PLI scheme.
    The board of Pegatron, Apple’s second largest contract manufacturer, has approved an initial investment of $150 million (Rs 1100 crore) for building manufacturing facilities in India, its top executive has said.

    Pegatron’s factory in India is expected to start production in the second half of next year or in early 2022 and the company plans to make more investments in India over the next two years, CEO Liao Syh-jang had said in an investor conference last week. The details were reported in the Taiwanese local media.

    Pegatron and Apple didn’t respond to ET’s emailed queries.

    The Taipei-headquartered iPhone assembler, which registered its India subsidiary in July this year, said that due to the pandemic, it has been harder for Pegatron staff to visit India, resulting in delays.

    Pegatron, along with other two Apple suppliers Foxconn and Wistron, has been cleared to avail sops under the central government’s production-linked incentive (PLI) scheme which kick started on August 1, 2020. Under the scheme, Apple will locally produce devices worth around $50 billion over five years, a bulk of which will be for exports, according to government data.

    Of the three, only Pegatron doesn’t have operations in India so far, and will start availing of the incentives under the PLI scheme only from April 1, 2021.

    In fact, the company started business operations in India this September with the appointment of statutory auditors and remittance of Rs 1 crore towards initial subscription of equity shares.

    Apple though has placed Pegatron on probation for violating its supplier code of conduct involving student workers at Pegatron factories in China.

    The CEO has said that the company will not let something like this happen again.

    Government officials in India though say that the development may not derail the Taiwanese vendor’s plans in India, ET had reported.

    12ET Bureau

    Apple, on its part, is heavily investing in local assembly of iPhones in India as it diversifies outside of China amid heightened US-China tensions. Electronics and IT minister Ravi Shankar Prasad had said at an event last week that Apple has shifted nine of its operating units from China to India during the Covid period.

    According to data from Counterpoint Research, Apple’s domestic production until September 2020 was 1.2 million units and is inching closer to last year’s total production of 1.4 million units, despite a 45-day shutdown of factories due to the pandemic. Around 42% of it assembled in India is sold locally, and the rest is exported.

    Apple has also been having among its strongest years in recent times, despite the pandemic. According to CyberMedia Research, Apple recorded the highest ever quarterly shipments - close to 700,000 units - in the July-September period and is positioned for aggressive growth in Q4 as well with a strong lineup of iPhone 12 series, 11 series and iPhone SE.

    The Cupertino-based giant has also ramped up its exports this year (via Foxconn and Wistron) - which grew from 50% to 58% - as the two manufacturers ramped up capacity in order to meet the 60% PLI target for exports, data showed.

    As for Pegatron, it must individually produce handsets worth Rs 4000 crore in its first year which begins in March 2021 under the PLI scheme.

    “Targets are easily achievable if they are able to start production next year but if it is stretched till 2022, they will have to convey this to the government and reach a middle ground, I think,” a senior executive in a mobile manufacturing firm said.

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    3 Comments on this Story

    Sagar Chordia64 days ago
    its a start, but it needs to be consistent
    Shiva Shankar64 days ago
    PLI scheme should also be tried in other electronic manufacturing sectors such as laptops pcs setop box, TVs, etc. apart from smartphones to lure global companies to India
    Wdias 64 days ago
    It is time to put a ban on all import of mobile phones Television , music systems, pressure cookers , cooking appliances, decorations, led bulbs, table and ceiling fans, cycles, motor cycles , fire crackers, water pumps, electric meters, all clothing shoes etc. Time to put a stop to imports and make in India and give jobs to Indians. GOI is there not to provide jobs to Chinese citizens. This policy to be permanently fixed in all govt officials, traders, customs authorities.
    The Economic Times