Even as the Union government continues to keep strong grip over Chinese equipment supplies in India, the government may allow Apple's Chinese vendors to set up manufacturing plants in India on a case-by-case basis. This comes after Apple announced to shift about 25% of its manufacturing to India.
According to sources, the Indian government is open to investments by Chinese entities that offer technology and production capabilities for which there is no alternative available.
If there are some concerns about the vendor and there is no alternative available, the Indian manufacturer will need to import the components. The government would also suggest a transfer of technology for local manufacturing, a model it had followed in the case of investments from China, the official said.
The government has been urging the world's most valuable company to bring its entire manufacturing ecosystem to India spanning iPhones, iPads and computers. The company that recently launched the iPhone 14, the latest iteration of its largest selling product, has been progressively scaling up India production to lower reliance on China.
Analysts and industry executives estimate the December quarter will mark Apple's highest ever shipment of iPhones to India at around 570,000 units compared with 370,000 units last year.
India in April 2020 amended the foreign direct investment (FDI) policy and made a prior government nod mandatory for foreign investment from countries sharing a land border with it, a measure that was seen largely targeted at Chinese investments. The Department for Promotion of Industry and Internal Trade (DPIIT), while making the change, said in its press note that this was aimed at “curbing opportunistic takeovers/acquisitions of Indian companies due to the current Covid-19 pandemic.”
These changes to the FDI policy implied that any foreign direct investment from Bangladesh, China, Pakistan, Nepal, Myanmar, Bhutan, and Afghanistan needed prior government approval, irrespective of the FDI cap applicable to the sector. Prior approval was made mandatory for sectors that were otherwise on the automatic route. This applied even to indirect FDI from these countries routed via others.
An inter-ministerial committee set up to look at proposals involving FDI from China has so far cleared investments in Citizen Watches Co., Nippon Paint Holdings and Netplay Sports Pvt Ltd. The three-pronged framework may help speed up a decision on some of the stalled proposals.