- China parts makers receive the initial go-ahead from India for growth plans
- Political tensions have hurt the expansion of Chinese companies in India
More than a dozen Chinese suppliers from Apple Inc. are receiving initial authorization from India to expand in the country, helping the tech giant’s efforts to diversify its assembly network beyond China.
AirPods and iPhone assembler Luxshare Precision Industry Co. and a unit of lens maker Sunny Optical Technology Group Co. are among the companies that got approval, said people familiar with the matter, who asked not to be named because the permits are not public. The clearances from key Indian ministries are a step towards full approval for expansion in India, and companies are likely yet to find local Indian joint venture partners, the people said.
Apple and other U.S. electronics brands are trying to reduce their dependence on China after Covid-related trade restrictions and production disruptions laid bare the risks of too much concentration in one country. The approvals indicate that India is allowing more Chinese companies to develop its technology manufacturing sector, even as political tensions between Asian neighbors have intensified.
Prime Minister Narendra Modi has made it a national priority to grow India’s manufacturing sector by providing financial incentives and government support for companies’ expansion projects. Apple has played a central role in that effort, with partners like Hon Hai Precision Industry Co. producing more iPhones in the country for the latest generation than ever before.
About 14 suppliers are getting the green light from India after Apple named them as companies whose services it needs to grow its presence in India, the people said. While the vast majority of Apple’s products are still assembled in China, the company in recent years has started manufacturing more of them in India through Taiwanese partners.
Representatives for Luxshare, Sunny Optical, Apple, and India’s Ministry of Technology did not respond to emails seeking comment.
Cupertino, California-based Apple exercises tight control over its supply chain which includes hundreds of component manufacturers. Some Indian companies, such as Tata Group, already provide parts to Apple, and the country is pushing to add more local suppliers to the supply chain to boost and diversify its electronics industry. Joint ventures with Chinese component manufacturers are one way to achieve this.
India largely isolated Chinese companies from its tech economy after the countries’ troops clashed violently on its long-contested border in 2020, leading to at least 20 deaths on the Indian side. The incident triggered anti-China business sentiment in the country.
India has since banned apps from Alibaba Group Holding Ltd., Tencent Holdings Ltd., and ByteDance Ltd., and raided, investigated, and penalized several other Chinese tech companies, from phone makers to fintech service providers. It has tightened rules prohibiting companies from neighboring countries from entering without government consent, and Chinese companies have lost state incentives for technology makers.
Meanwhile, India has been steadily ramping up local smartphone assembly, allowing Taiwanese manufacturers Hon Hai, Wistron Corp., and Pegatron Corp. to set up plants. But the absence of crucial component manufacturers close to their operations has limited the growth of the domestic industry.
While India is now approving the expansion of several Chinese suppliers in the country, some are still being turned away, the people said. Apple submitted a list of about 17 suppliers to Indian authorities, and some of them were rejected, at least one because of direct ties to the Chinese government, one of the people said.
Han’s Laser Technology Industry Group Co. and Shenzhen YUTO Packaging Technology Co. are among those being authorized, the people said.
Source: Bloomberg
