In a potential boost to Prime Minister Narendra Modi’s “Make in India” initiative, tech giant Apple Inc. is nearing a deal with Taiwanese contract manufacturer Wistron Corp. to start making products in the southern state of Karnataka, a senior state official said.
“The contractual agreement between the two companies is on the verge of being signed,” the Karnataka government official who has direct knowledge of the matter said.
The first phase of assembling iPhones will likely start as early as the end of March, and further expansion is expected over the next two to six months, the official said.
An Apple spokeswoman said the company has nothing to share beyond a statement it made last week, which said: “We appreciate the constructive and open dialogue we’ve had with [the] government about further expanding our local operations.”
A Wistron spokeswoman declined to comment. The company has a factory in the southern Indian city of Bangalore where it makes smartphone components, and has sought permission from the state authorities to expand the facility with additional power supply and fire-fighting facilities, the official said.
“What we are given to understand is that Apple is awaiting a final word from the government of India regarding tax and tariff concessions sought by the company, before signing up the contractual agreement,” the official said.
Making goods such as the iPhone locally may help the Cupertino, Calif., company to open its own stores in India, in turn building its brand in a country where it has less than a 5% share of a booming smartphone market.
Karnataka’s Information and Technology minister, Priyank Kharge, welcomed Apple’s proposal to consider Bangalore, also known as Bengaluru, as the location for potential manufacturing.
“Apple’s intentions to manufacture in Bengaluru will foster cutting edge technology ecosystem and supply chain development in the state, which are critical for India to compete globally,” Mr. Kharge said in a statement Thursday.
Apple is looking to ramp up revenues in India as sales stagnate in China, long an engine of growth. India should soon overtake the U.S. as the world’s second-largest smartphone market after China. Smartphone shipments in India grew 18% last year, compared with just 3% globally, according to Counterpoint Research.
Apple Chief Executive Tim Cook in a call with analysts this week confirmed the company is “in discussions” to open retail stores in the country, and said Apple intends to “invest significantly in the country and believe it’s a great place to be.”
Last week, a team of executives led by Priya Balasubramaniam, an Apple vice president, met with senior Indian government officials in New Delhi as well as state officials in Karnataka to discuss the firm’s proposals.
Under Mr. Modi, India has been eager to attract foreign investment and create the manufacturing facilities and jobs the country needs to sustain long-term growth.