Tata plans new iPhone factory to hasten Apple's India expansion

Mumbai: Conglomerate Tata Group plans to build one of India's biggest iPhone assembly plants, tapping Apple Inc.'s ambitions to increase manufacturing in the South Asian country.

Tata wants to construct the factory in Hosur in the southern Tamil Nadu state, according to people with knowledge of the matter. The facility will likely have about 20 assembly lines and employ 50,000 workers within two years, according to the people, who declined to be named discussing unannounced plans. The goal is for the site to be operational in 12 to 18 months.

Localising supply chain

The plant would bolster Apple's efforts to localise its supply chain and strengthen its partnership with Tata, which already has an iPhone factory it acquired from Wistron Corp. in the neighbouring Karnataka state. Apple is diversifying its operations away from China by working with assembly and component manufacturing partners in India, Thailand, Malaysia and elsewhere.

An Apple spokesman declined to comment, while a Tata representative didn't respond to a request for comment.

Expanding beyond traditional businesses

The Indian conglomerate has taken other steps to increase its business with Apple and expand beyond its traditional businesses that range from salt to software. It has accelerated hiring at its existing facility in Hosur, where it produces iPhone enclosures, or metal casings. Tata has also said it'll launch 100 retail stores focused on Apple products. For its part, Apple has opened two stores in the nation and is planning three more.

Prime Minister Narendra Modi's production-linked subsidies have spurred Apple's key suppliers such as Taiwan's Foxconn Technology Group and Pegatron Corp. to ramp up in India. That helped Apple assemble more than $7 billion of iPhones in India in the previous fiscal year, increasing the country's share of the device's production to about 7%. The rest are assembled in China, which until a few years ago made all of them.

Mid-sized plant

The new plant is set to be mid-sized among iPhone factories globally. It would likely be bigger than the one Tata acquired from Wistron, which employs more than 10,000 people, and smaller than Foxconn's biggest China facilities that employ hundreds of thousands.

Apple and Tata could likely urge the government to award subsidies for the new factory as it's expected to begin production just as previous state-backed financial incentives are set to expire.