iPhone (3)

Apple has asked Foxconn, the large Taiwanese based manufacturing company with massive manufacturing facilities in mainland China, to examine making iPhones in India, or so suggest rumours.

“There’s definitely interest, said once anonymous source, adding “when Tim Cook was here [in India], the government raised the issue of making in India.”

Apparently this got Apple thinking and has now advanced plans. Foxconn is the largest contract manufacturing company in the world, but was embroiled in controversy a few years ago over allegations related to it working practices at its factories in China, which saw a spat of suicides.

If iPhones really are to be made in India, then this will have several important implications.

For China, this is not a blow necessarily, but it is a symptom of changes that are afoot in the country. Its population is not growing as fast as it used to, in fact China has passed, or is close to passing, what’s called the Lewis Turning Point, when it runs out of workers to migrate from the country to towns and cities. The period when China is the factory of the world may be coming to an end, India is the natural successor. China does, in any case, want to move up the value chain – in which case mass manufacturing may not be quite so important in the years to come.

India is fast emerging as the new darling of emerging markets, but until recently is was growing via services – its famous call centres – but manufacturing may well be the key for its to grow to the next stage. A deal with Foxconn/Apple will represent a very prestigious moment for Indian manufacturing, opening the way for other manufacturing contracts.

Finally, for Apple, it is an opportunity to piggyback on its manufacturing deal, to advance sales of the iPhones and other Apple Products into the world’s most populous country, as well as sell launch Apple stores across India. Apple CEO Tim Cook said in June that iPhone sales were up 56% in India over the year.

Also, during the summer, India's Prime Minister Narendra Modi and his cabinet, approved a three-year exemption for local sourcing for foreign, single brand, retailers, making “cutting-edge technology." In other words, the way is open for Apple to open its Apple stores in India.