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Tatas to Start INR 5,000 Cr. Apple Component Unit

Tata Electronics, a wholly owned subsidiary of Tata Sons, plans to enter into the phone component manufacturing business and will be investing around INR 5,000 Crore to establish a manufacturing plant of Apple iPhone’s components at the Industrial Complex in Hosur, Tamil Nadu.

What Intrigued Tata Sons Interest in the sector?

US-China trade war has forced many electronics manufacturers to move out of China. Already few big Apple component manufacturers like Foxconn Hon Hai, Wistron, and Pegatron have announced to open their manufacturing units in India. Tata Son’s also wants to take advantage of the opportunity in this sector.

Benefit from Government’s PLI Scheme

It may also be eyeing to take advantage of the PLI Scheme by Government of India. Ministry of Electronics and Information Technology (MeitY), on 1st April, 2020 brought Product Linked Incentive (PLI) scheme for domestic mobile phone manufacturers along with related electronic components, including Assembly, Testing, Marking and Packaging units. Under this scheme incentive of 4% to 6% will be given on incremental sales (over base year) of goods manufactured in India.

Funding and Push Start Plan for the Project

Recently a story was published by  ET Telecom (Economic Times) on 4th December 2020 that says “Tata Sons is seeking up to a $1 billion in overseas loans to set up a globally scalable mobile phone and component contract manufacturing plant in Tamil Nadu”.

Tata Group is targeting a capital expenditure for this project via a combination of internal accruals and borrowings. According to a media report company is also headhunting CEO for this new venture and few directors from top electronic brands have also been roped in. This plant initially will start by making iPhone parts and it will be operated by Tata Electronics. Initially, it will make iPhone casings and eventually will partner with other original equipment manufacturers (OEMs) in South Korea and Japan to create larger electronics ecosystem.