Apple’s Original Equipment Manufacturer (OEM) partner Wistron (based from Taiwan) has started assembling and shipping the 4-inch iPhone SE model in India, according to this Bloomberg report. The devices are assembled by Wistron in its Peenya manufacturing plant in Bangalore, the report added. When MediaNama inquired Apple about the development, a spokesperson declined to comment on the specifics, but pointed out to a statement issued by the company in May 2017:

“We are beginning initial production of a small number of iPhone SE in Bengaluru. iPhone SE is the most popular and powerful phone with a four-inch display in the world and we’ll begin shipping to domestic customers this month.”

A Wall Street Journal report in May had first carried the specific that Taiwan-based Wistron was chosen by Apple to assemble devices in Bangalore. As per Wistron’s website, it mentions that it has a “Service Center” in Bangalore. WSJ’s Newley Purnell‏ and ITNET Infocom, a mobile phone distributor based in Kerala put out tweets confirming that the device has already hit the shelves. Currently, Apple is selling iPhone SE (32GB) for an MRP price of Rs 27,200, as per the tweets.

Why only iPhone SE?

The spokesperson declined to comment when MediaNama inquired whether Apple is considering assembling other devices/models. There are two reasons as to why we think Apple is limiting itself to iPhone SE assembly in India:

1) iPhone 4s kept selling in India like ‘hot cakes’ :
Since Apple hit the $1 billion sales mark in India in November 2015, Tim Cook has been constantly seeing India as a huge market opportunity. In the same year, the outdated iPhone 4s was reportedly selling like hot cakes, with prices dropping below Rs 13,000 ($200), accounting for Top 10 smartphones sold via online portals. It makes sense that Apple starts off with the enhanced iPhone SE model which was launched in March 2016, since the 2015 development was indicative that India users prefer cheaper models.

2) FDI, tax, local sourcing restrictions:
In June 2016, the government had relaxed mandatory 30% local sourcing norms for products that are “state-of-art and cutting edge’ technology.  Apple subsequently tried to gain the “state of the art” status in May last year, but it is not clear if this worked in Apple’s favour. Earlier this year in April, Apple demanded tax exemptions to set up a manufacturing unit in India, including a 15-year exemption from customs duty, but these requests were put on hold.

Note that between this period, the government of India abolished Foreign Investments Promotion Board (FIPB), a fast-track unit set up by the govt to look into FDI proposals (made by companies like Apple). This finally allowed foreign smartphone brands to set up single brand retails units under current FDI and local sourcing norms. However, it is not clear if Apple received tax rebates and whether it sources material locally.  With such restrictions in foreign trade, and with GST tax regime kicking in, Apple may have been forced to re-look their bullish stance on the Indian market, and start with a basic iPhone SE model to help penetrate the market first. Note that the Indian smartphone market is currently led by Apple’s rival Samsung.