Adding to a large wave of foreign tech investments in India this year, Apple assembler Pegatron is making preparations for its first plant in India.
In June, the Indian government set out a $6.6 billion plan to woo the world’s top smartphone manufacturers, offering financial incentives and ready-to-use manufacturing clusters. Pegatron is now setting up a local subsidiary and joining fellow Taiwanese electronics assemblers Foxconn Technology Group and Wistron Corp., who have already been making some iPhone handsets in southern India.
With a number of factories in China, Pegatron is the second-largest iPhone assembler and depends on Apple for more than half of its business. Like its peers, it will set up in the south of India, according to a person familiar with its plans who asked not to be named. Foxconn, also known as Hon Hai, and Wistron are looking to expand their operations in the country, and Pegatron’s entry can be seen as a defensive move to protect its share of budget iPhone manufacturing, according to Matthew Kanterman of Bloomberg Intelligence.
The country offers a vast pool of skilled labor as well as a domestic market of a billion mobile connections. Only about half of those are smartphones, however, leaving untapped potential that is attractive to growth-hungry global brands like Apple… For assemblers like Pegatron, exports would also be an enticing opportunity, especially at a time of worsening trade relations between Washington and Beijing making it imperative to have a diverse geographic base.
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An Asian diplomat told me India will always have the advantage of cheap labour due to the caste system, whereas Chinese workers are becoming more aspirational and demanding better pay and conditions.