TATA Group & Apple Deal
TATA Group to invest Rs 5000 Crore to make iPhone parts in India
At the Hosur industrial complex of Tamil Nadu, TATA Group with an overall investment of Rs 5000 Crore, is planning to set up a phone manufacturing plant for the production of core components for iPhones.
500 acres of plot has been allotted to Tata Electronics which is the new company of Tata Group by TIDCO (Tamil Nadu Industrial Development Corporation).
A future plan of investment of Rs 8000 Crore has also been put forward by the investors depending on the level of sourcing from the facility.
After Covid-19 crisis, Apple, which has a manufacturing unit in China, was looking to diversify and set-up a new facility in any of the South Asian Countries. That’s how this new unit came into existence, where Tata Electronics will be manufacturing components for Apple. In India, Foxconn is already manufacturing handsets, including iPhone 11 at its facility in Sriperumbudur, outskirts of Chennai.
The Tata plant seems to be the first-ever plant in India which is meant for components instead of overall smartphone assembly and manufacturing.
This new unit of Tata will have a staff strength of 18,000 by October 2021, 90% of which will be women to encourage women empowerment.
After the announcement of a productivity-linked incentive by the Modi government to make India self-sufficient in the manufacturing of mobile handsets, Tata Group grabs this opportunity.
Under the PLI scheme, the Government of India would provide incentives of 4-6% to electronics companies which specifically manufacture mobile phones and other electronic components such as Transistors, Diodes, Thyristors, Resistors, Capacitors, and Nano-Electronic components such as Micro-Electromechanical systems.
According to this scheme, companies that make mobile phones whose selling price would be Rs. 15,000 or more will get an incentive of up to 6%, based on incremental sales of all such mobile phones made in India.
In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentives allotted under this scheme will be Rs. 200 Crore for the next 4 years. 10 companies have already received government clearance for mobile phones under The Atmanirbhar Bharat Policy.
Titan Co. Ltd.’s precision engineering division, Titan Engineering and Automation Ltd. (TEAL), will provide the expertise for this project with a 27.88% stake in Titan Co. Ltd., TIDCO is the single largest shareholder in the watchmaker.
It was observed that there was intense competition amongst states to bag this project. In the end, it was the state of Tamil Nadu who grabbed the project over Karnataka. What worked in Tamil Nadu’s advantage appears to be its favorable policies and presence of companies like Foxconn, Flex, Samsung, Dell, Nokia, Motorola, and BYD to name a few.
The state government recently released the Tamil Nadu Electronics Hardware Manufacturing Policy 2020 and has set an ambitious target to increase the electronics industry output to $100 billion by 2025. It envisages the state contributing 25% of India’s total electronics exports by that year.
By Aditya Verma