Tata Sons Will Spend Rs 11,000 Crore to make iPhones In India! Where Will Be The Factory?
The Economic Times reported citing quoting sources aware of a recent development in which Tata Sons is planning to setup a mobile phone and component manufacturing plant in Tamil Nadu to make iPhone parts and is seeking up to $1 billion through overseas loans for the same.
The partnership with Apple will be part of Prime Minister Narendra Modi’s “Make in India” push. The Tata Group will avail the benefits under recently unveiled PLI (productivity-linked incentive) scheme of the Modi government.
What is a PLI (Production Linked Incentive) scheme?
In order to reduce India’s dependence on China, the government in March announced a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.
The scheme is applicable for mobile and allied equipment as well as pharmaceutical ingredients and medical devices manufacturing. As these sectors are labor-intensive, it is expected to cater to the growing employment demands of the country.
The aim of a PLI scheme is to incentivize and invite global, capital-rich companies to set up capacities in India. This scheme which is aimed at turning India to a global electronics manufacturing powerhouse, has got a good response for its PLI scheme from global players such as Wistron, Pegatron, Foxconn, Hon Hai, Samsung.
Among Indian firms, Lava, Dixon, Micromax, Padget Electronics, Sojo, UTL, and Optiemus have applied for benefits under the government’s PLI scheme.
According to the ET report, Tata Sons is looking to secure $750 million to $ 1 billion in external commercial borrowings while mobilizing the remaining sum through internal accruals. They plan a capital expenditure of $1.5 billion for building manufacturing capacity in this area.
While the new production unit is expected to cater to Apple’s sourcing needs to begin with, it may eventually scale to meet the requirements of other OEMs from South Korea and Japan.
Where Will Be The Factory?
Apple, which is planning to diversify its sourcing base from China, will soon have its units manufactured from the production facility to be developed in Tamil Nadu. Reportedly Tata Group is investing ?5,000 crore to set up a phone component manufacturing plant at the industrial complex in Hosur, Tamil Nadu. The new company, Tata Electronics, has been allotted 500 acres by TIDCO (Tamil Nadu Industrial Development Corporation).
When there is a project of such a scale, some help is sought from the experts and here Titan Co Ltd.’s precision engineering division, Titan Engineering and Automation Ltd (TEAL), has been roped in to provide the expertise for this project. The new unit will have a staff strength of 18,000 by October 2021 and 90 per cent of it will be women.
Tamil Nadu government recently unveiled the Tamil Nadu Electronics Hardware Manufacturing Policy 2020 and has set an ambitious target to increase electronics industry output to $100 billion by 2025. It envisages the State contributing 25 per cent of India’s total electronic exports by that year