Air India eyes bright future as the exclusive carrier for Tata’s iPhone exports

Tata Electronics (TEPL), the manufacturing division of the Tata Group, latest acquisition of Wistron’s contract-based Apple iPhone manufacturing operations in India for a sum of $125 million has turned all eyes toward the Group’s Airline, Air India, which is now looking at potentially generating exclusive freight volumes.

Wistron’s presence in India encompasses four assembly lines in the state of Karnataka, with plans for an additional unit in the same vicinity. With this acquisition, Tata became the first indigenous iPhone manufacturer in India, joining the ranks of companies like Taiwan’s Foxconn and Pegatron.

It’s noteworthy that the Indian government recently implemented licensing requirements for the import of specific electronic goods to encourage investment in local manufacturing.

“The acquisition of Wistron by Tata is seen as a catalyst for further investment in India’s electronics manufacturing ecosystem, signaling the growth of the country’s contract manufacturing sector,” stated India’s IT minister, Ashwini Vaishnav.

Experts believe that Tata’s acquisition of Wistron’s Bengaluru facility presents promising opportunities for Air India to expand its cargo services. As smartphone exports continue to surge, Air India’s involvement could become a significant driver of growth for both the airline and the Indian smartphone manufacturing industry.

Industry observers are keen to see how Tata-led Air India will harness its air cargo capabilities for iPhone exports, particularly to key markets like the US, China, Japan, and the UK.

To maintain competitiveness, Tata, as the owner of Air India, is concentrating on bolstering its cargo capacity and aims to quadruple belly cargo capacity when operations reach full scale. Presently, Air India has approximately 470 Airbus and Boeing aircraft on order, with most deliveries expected to commence in 2025.

In the fiscal year 2022-23, Apple iPhone exports from India exhibited an impressive fourfold year-on-year growth, reaching an estimated value of $5 billion, according to preliminary government data. Additionally, in the first quarter of the fiscal year 2023-24, Apple overtook Samsung to become the leading exporter of smartphones from India.

From a policy perspective, the Indian government is striving to capture a share of the trade transition from China, as the current success falls short of expectations despite offering an attractive productivity-linked incentive scheme for investors. Nonetheless, due to substantial import tariffs on smartphone imports, local contract manufacturing by foreign brands has gained momentum, positioning India as arguably the world’s second-largest handset manufacturing hub after China.