India to start manufacturing iPhone parts – Tata Sons takes the initiative

Tata Sons is all set to set up a mobile phone and component contract manufacturing plant of global standards in Tamil Nadu for which it is seeking up to $1 billion in overseas loans.

Tata Sons will soon set up a mobile component manufacturing plant in India with an intention to attract mobile makers such as Apple to alternative production sites other than China. The first manufacturing will begin with Tata Electronics, a new subsidiary of Tata Sons with iPhone casings, and later plan to partner with OEM or Original Equipment Manufacturers in Japan and South Korea with the initiative of being a part of larger electronics ecosystem.

Planning to set up a global mobile and component manufacturing plant at the industrial plant in Hosur, Tamil Nadu, Tata Sons seeks a loan of $1 billion from overseas investors to start manufacturing iPhone parts. The partnership with Apple will prove to make further progress towards Make in India, Prime Minister Modi’s Prime Goal. Tata Sons expect a total expenditure of $1.5 Billion by combining borrowings and internal accruals to prioritize this project. This project is part of Tata Chairman N Chandrasekaran who is keen on drawing mobile makers to different sites in India.

Tata Electronics who will take the lead in this project has been allotted a 500 acres plot by Tamil Nadu Industrial Development Corporation or TIDCO. The Tata Group plans to take good advantage of the partly new scheme unveiled in the month of August which is the PLI or the Production Linked Incentive Scheme. This scheme helps and encourages domestic manufacturing which will boost India’s economy. 

The expertise in this project is said to be led by Titan Engineering and Automation Limited or TEAL which is Titan Co Ltd’s precision engineering division. The unit is said to have mostly women employees (up to 90%) and will reach a staff strength of 18,000 by the second half of 2021, most likely by October. 

With the vision to increase the electronics industry output to $100 billion by 2025, the government of Tamil Nadu unveiled the Electronics Hardware Manufacturing Policy 2020 expecting that the State of Tamil Nadu alone will contribute by 25% of India’s total electronics exports by the year of 2025.

Tata Electronics will set up the manufacturing plant not just to manufacture iPhone parts but any other mobile parts or components instead of the overall manufacturing of a phone and its assembly.

The manufacturing plant seems to be a major initiative and will only encourage India’s manufacturing capabilities.“This offers high growth potential for the group provided the execution is done well and by roping in top management with expertise in this area…the group is identifying the right CEO to head this venture and also roping in directors from GE”, said one of the directors of the group. 

Tata Electronics is not enclosing many details about its partnership with Apple and will do so only after announcing the start of the project. Among the 16 firms that signed up for the PLI scheme of $6.65 billion are Samsung and the three major contract manufacturing partners of Apple – Foxconn, Wistron and Pegatron envision boosting domestic production of smartphone mobiles by 2025. 

As it is one major project, the proper execution with the best expertise will matter the most. Tata Electronics is seeking an amount between $750 million to $1 billion in ECB or External Commercial Borrowings.


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