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As Apple looks to break into India's burgeoning smartphone market, a report on Tuesday claims the company is in talks with Foxconn to potentially manufacture iPhone in the region.
Citing sources familiar with Apple's plans, The Economic Times reports the company is discussing the possibility of manufacturing a quantity of iPhone models at Foxconn's Indian facilities. While an exact timeline for the production shift has yet to be fleshed out, the report estimates the change might come in the next two to three years.
"There's definitely interest," said an unnamed source. "When Tim Cook was here, the government raised the issue of making in India. It is after that that Apple started thinking of doing something in India which is long term."
The report jibes with rumors earlier this year suggesting Foxconn plans to build a plant in India exclusively for Apple products.
Cheaper prices for locals, a faster time to market and another production hub are among the benefits of manufacturing in India. It might also give Apple an in to opening retail stores in the region.
The company has for years sought government approval to operate branded stores in India, but is continually stymied by foreign direct investment trade policies. India trade laws require single-brand stores to source at least 30 percent of goods from domestic suppliers, meaning Apple would have to be granted an exemption — it was not — or start producing its products in the region. There have been numerous reports indicating members of the Indian government, including the cabinet of Prime Minister Narendra Modi, are willing to work with Apple on a potential resolution, but an official agreement has yet to be announced.
In August, Commerce and Industry Minister Nirmala Sitharaman led a charge to reevaluate Apple's application for exemption, prompting the finance ministry to reportedly ratify a proposal that would allow single-brand retailers to operate brick-and-mortar stores as long as they are considered a provider of cutting-edge technology.
Perhaps looking to deliver evidence that Apple's presence would add value to the region, CEO Tim Cook visited India with a few key executives in May. The team met with local telecommunications companies to discuss iPhone partnerships, while Cook sat down with Modi to talk retail, manufacturing, encryption and more. The meetings came shortly before Apple announced plans to open a Maps development center in Hyderabad.
India represents a huge opportunity for Apple as iPhone sales plateau. As a premium brand, however, iPhone is slow to catch on in the developing market. Figures released by research firm Strategy Analytics last month show Apple's share of the Indian smartphone market fell 35 percent year-over-year to 2.4 percent during the quarter ending in June. Google's Android, by contrast, owned 97.1 percent of the market.
Despite Android's overwhelming domination of India's existing consumer base, Apple appears adamant to push into the region banking on its "quality over quantity" mantra. When visiting in May, Cook said Apple is working to bring its entire product line to Indian customers.
"We are in India for the next thousand years," Cook said at the time. "Our horizon is very long. We are focused on best, not most. So it doesn't bother me that we don't have top market share."