Apple's India Presence Strengthened as Chinese Suppliers Receive Approval

India has granted preliminary approval to over a dozen of Apple Inc.'s Chinese suppliers to expand their operations in the country, aiding the tech giant's mission to spread out its assembly network beyond China.

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Luxshare Precision Industry Co., an assembler of AirPods and iPhones, and a unit of Sunny Optical Technology Group Co., a lensmaker, have reportedly been granted approval, according to people familiar with the situation who asked to remain anonymous since the permits are not public. This clearance from key Indian ministries is a step towards full approval for the companies to expand in India, and they will likely still need to find local Indian joint venture partners, the sources added.

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In light of the trade restrictions and Covid-19 related production issues, Apple and other US electronics companies are attempting to lessen their dependence on China. This approval of Chinese companies to build out India's tech manufacturing sector indicates that India is allowing more Chinese companies in, despite the increasing political tensions between the two Asian countries.

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India's Prime Minister Narendra Modi has made it a priority to increase the nation's manufacturing sector, offering financial incentives and government assistance for companies' growth initiatives. Apple has been a major part of this effort, with partners such as Hon Hai Precision Industry Co. manufacturing more iPhones in India for the latest generation than ever before.

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Fourteen suppliers have been given the go-ahead from India, according to people familiar with the situation. Apple has identified these companies as necessary for its expansion in the country. Although the majority of Apple products are still manufactured in China, the company has been gradually increasing production in India with the help of Taiwanese partners.

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No response was received from representatives of Luxshare, Sunny Optical, Apple, and India's technology ministry when emails were sent out requesting comments.
Apple, based in Cupertino, California, has a very strict supply chain that consists of hundreds of component manufacturers. The Tata Group, an Indian company, is already supplying Apple with parts, and India is attempting to add more local providers to the supply chain to expand and diversify its electronics industry. One way of doing this is through joint ventures with Chinese component makers.

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Tata is close to completing a deal that would make them the first Indian company to manufacture iPhones. This takeover would be a major milestone for the company.
In 2020, India and China experienced a violent clash along their long-disputed border, resulting in the death of at least 20 Indian soldiers. This event caused a surge in anti-China sentiment in India, leading to the exclusion of Chinese companies from the country's tech economy.

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India has taken a number of steps to limit the presence of Chinese tech companies in the country. Apps from Alibaba Group Holding Ltd., Tencent Holdings Ltd. and ByteDance Ltd. have been banned, and other Chinese tech companies have been investigated, examined and fined. Regulations have been put in place that require companies from bordering countries to obtain government approval before entering the country, and Chinese companies have been excluded from receiving state incentives for tech manufacturing.

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India has been gradually increasing the local assembly of smartphones, allowing Taiwanese companies Hon Hai, Wistron Corp., and Pegatron Corp. to establish factories. However, the lack of essential component producers in the vicinity of their operations has hindered the development of the domestic industry.
India has given the green light to some Chinese suppliers to expand their operations in the country, but others have been denied, according to people familiar with the matter. Apple reportedly submitted a list of around 17 suppliers to Indian authorities, and a few of them were not approved, with at least one being rejected due to its direct connection to the Chinese government, one of the people said.

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Han's Laser Technology Industry Group Co. and Shenzhen YUTO Packaging Technology Co. have been given the go-ahead, according to sources.