Tata Group, one of India’s largest conglomerates, has cemented its place in the global smartphone supply chain with its recent deal to acquire a majority stake in Pegatron’s iPhone manufacturing plant in Tamil Nadu. This agreement positions Tata as a significant player in Apple’s strategy to diversify production outside of China. But what does this mean for India, Apple, and Tata?
The Big Deal in Tamil Nadu
In a strategic move, Tata has formed a joint venture with Taiwanese electronics manufacturer Pegatron, acquiring 60% ownership and operational control of its iPhone assembly plant. Pegatron retains the remaining 40%, ensuring technical continuity. This deal bolsters Tata’s ambitions in electronics manufacturing, adding to its existing facility in Karnataka, which already assembles iPhone components.
The Tamil Nadu plant represents a pivotal step in Apple’s shift to decentralise its supply chain amidst growing geopolitical tensions between the US and China. This venture not only aligns with Apple’s need for stable production lines but also furthers India’s ambitions to establish itself as a global electronics manufacturing hub.
Who is Pegatron?
Pegatron is a Taiwanese electronics manufacturer and one of the key players in Apple’s global supply chain. Known for its expertise in assembling high-quality electronics, Pegatron primarily produces iPhones, iPads, and other Apple devices. It operates manufacturing facilities worldwide, supporting Apple’s strategy of diversifying production locations.
Pegatron’s decision to sell a majority stake in its Tamil Nadu plant to Tata reflects its efforts to streamline operations while maintaining a role in India’s growing market. By retaining a 40% stake, Pegatron ensures its technical know-how remains integrated into the plant’s day-to-day activities.
Why Apple and Why Now?
Apple’s diversification strategy is a response to vulnerabilities exposed by over-reliance on Chinese factories, particularly during the COVID-19 pandemic and amidst rising US-China trade tensions. India, with its growing tech ecosystem and government incentives like the Production Linked Incentive (PLI) scheme, has emerged as a natural alternative.
For Apple, partnerships like this allow it to tap into India’s competitive labour market and establish closer ties with one of its fastest-growing markets. India’s middle class is increasingly embracing premium products, and Apple’s efforts to localise production help mitigate import tariffs, making iPhones more accessible.
Tata’s move into electronics is part of its broader strategy to modernise and diversify. Known for its legacy in steel, automobiles, and IT services, the group has ventured into high-tech manufacturing in recent years. With the Pegatron deal, Tata becomes the first Indian company to assemble iPhones domestically—a significant milestone in the country's industrial landscape.
While this deal marks progress, challenges persist. India’s infrastructure and supply chain need further strengthening to match the scale and efficiency of Chinese counterparts. Additionally, managing high-tech manufacturing processes, which require precision and skilled labour, is a new frontier for Tata.
However, the opportunities are immense. As Apple expands its footprint, Tata’s collaboration may open doors to producing other components and devices, enhancing India’s role in the global tech supply chain.
