Apple to manufacture iPhones in India
Apple close to deal on manufacturing iPhones in India Getty Images/Taylor Hill

Apple is reportedly nearing a deal to set up a unit to manufacture iPhones in India, as the company seeks to boost sales in the country with a massive market.

A team led by Apple vice president Priya Balasubramaniam met a senior government official in New Delhi on Wednesday (25 January) to have a discussion.

"It's almost a done deal," a senior government official with knowledge about the matter told the Wall Street Journal.

The finance ministry "will look into" Apple's requests related to tax exemptions, said the official adding: "Many of the incentives sought by Apple are workable." The company wants a 15-year tax holiday on import of components and equipment.

The government's intention was to "settle with Apple", another official who works closely with Prime Minister Narendra Modi, told the WSJ. The official said Apple could see India as the next export hub.

An Apple spokeswoman said: "We appreciate the constructive and open dialogue we've had with [the] government about further expanding our local operations."

"We've been working hard to develop our operations in India," she added.

The iPhone maker's move comes as Wistron, a Taiwanese original equipment manufacturer for Apple, was reported to be setting up a facility in Peenya, the industrial hub of Bangalore. The facility would begin production in April next year, while the full manufacturing line is expected to begin sometime at the end of next year.

After Apple sets up its manufacturing facility in India, analysts believe the country could overtake the US as the second-largest smartphone market, followed by China. According to data shared by Counterpoint Research, smartphone shipments in India grew 18% last year, when compared to 3% globally.

"Apple would get some brownie points with the government if they could say, 'We are contributing to India and creating value for the local economy,'" Neil Shah, an analyst with Counterpoint, said.