The development comes at a time when growing tension in US-China trade ties is forcing companies to explore alternative manufacturing sites in order to derisk operations.
While there has been considerable speculation that manufacturing locally might reduce the cost of production and bring down prices, an expert said since this is only an assembly unit and the components are still being imported, costs will not come down significantly.
Josh Foulger, managing director, Foxconn India and Apple spokesperson did not offer any comment. Sources said Foxconn, which already makes mobile phones for Xiaomi, has invested over Rs 2,500 crore in Tamil Nadu for manufacturing electronic products, including mobile phones at Sriperumbudur near Chennai.
Apple started assembling iPhone SE in 2017 and iPhone 6S in 2018 at Taiwanese firm Wistron's Bengaluru plant and early this year it started manufacturing iPhone 7 at the Foxconn unit. iPhone SE is no longer assembled in India, but the other two models continue to be.
The news comes as a big boost for Tamil Nadu, once the global hub of erstwhile mobile phone major Nokia, whose feature phones were manufactured in Sriperumbudur. The SEZ, which also had various component makers including Foxconn, ran into trouble after the Income Tax Department slapped a demand of Rs 21,000 crore on Nokia, the main unit in the zone. The tax dispute, along with sale of its global mobile phone business to Microsoft, forced Nokia to suspend operations at the factory. Around 8,000 direct employees, of whom about 60 per cent were women, and 21,000 indirect employees lost their jobs.
Foxconn later set up a mobile phone unit at the integrated business location Sri City in Andhra Pradesh, which is close to Chennai. It also set up various other units in Tamil Nadu. It has been looking at reviving mobile phone and related operations in Tamil Nadu.
The state government said earlier this year that Tamil Nadu ranks second in India, after Uttar Pradesh, in the manufacture of computers, electronics and optical products, accounting for 16 per cent of national production. The state ranked third in India in electronic exports ($1.27 billion) in FY18.
Tamil Nadu has two sector-specific SEZs for electronics and hardwareSector in Kancheepuram, a 486-acre electronics and telecommunications hardware Hi-Tech SEZ in Sriperumbudur and a 348-acre electronic hardware Hi-Tech SEZ in Oragadam.
India has emerged as a sought-after location for mobile phone assembling, as the government has, in consultation with the industry, introduced a phased programme under which local manufacturing of various components has been promoted over the years. According to reports, India recently overtook Vietnam to become the world’s second largest manufacturer of mobile phones, made across 268 assembling units.