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Apple gets a boost in India as Chinese suppliers given clearance

More than a dozen Chinese suppliers to Apple Inc. India's Chinese suppliers are receiving initial clearance by India to expand in the country, helping the tech giant's efforts to diversify its assembly network beyond China.

People familiar said the AirPods and iPhone assembler Luxshare Precision Industry Co. and a unit of lensmaker Sunny Optical Technology Group Co., Ltd. The people said the Approvals from key Indian ministries are a step towards full approval of the expansion in India, and companies will likely need to find local partners for the Indian joint venture.

Apple and other US electronics brands are trying to reduce their reliance on China after Covid-related trade restrictions and production disruptions exposed the dangers of excessive concentration in one country. The permits indicate that India is allowing more Chinese companies to develop its technology manufacturing sector, even as political tensions intensify between its Asian neighbors.

Prime Minister Narendra Modi has made it his national priority to grow India's manufacturing sector, providing financial incentives and government support for company expansion projects. Apple has played a major role in this effort, with partners like Hon Hai Precision Industry Co., which produces more cutting-edge iPhones in the country than ever before.

About 14 suppliers are getting the green light from India, the people said, after Apple named them companies whose services it needs to grow its presence in India. While the vast majority of Apple products are still assembled in China, in recent years the company has begun manufacturing more in India through Taiwanese partners.

Representatives for Luxshare, Sunny Optical, Apple and India's Ministry of Technology did not respond to emails seeking comment.

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Cupertino, California-based Apple wields tight control over its supply chain, which includes hundreds of component manufacturers. Some Indian companies, such as the Tata Group, already supply parts to Apple, and the country is pushing to add more local suppliers to the supply chain to boost and diversify the electronics industry. Joint ventures with Chinese component manufacturers are one way to achieve this.

India has largely isolated Chinese companies from its tech economy after forces from the two countries clashed violently on their long-disputed border in 2020, leaving at least 20 people dead on the Indian side. The incident caused a rise in anti-Chinese sentiment in the country.

India has since banned apps from Alibaba Group Holding Ltd. and Tencent Holdings Ltd. and ByteDance Ltd. It has tightened rules barring companies from neighboring countries from entering without government approval, and Chinese companies have lost state incentives for technology manufacturers.

Meanwhile, India is steadily increasing domestic smartphone assembly, allowing Taiwanese manufacturers Hon Hai, Wistron Corp and Pegatron Corp to set up plants. But the absence of manufacturers of critical components near its operations limited the growth of the local industry.

The people said that while India is now approving the expansion of many Chinese suppliers into the country, some are still refusing. One person said Apple has submitted a list of some 17 suppliers to Indian authorities, and quite a few of them have been turned down, at least one due to direct ties to the Chinese government.

The people said that Han's Laser Technology Industry Group and Shenzhen YUTO Packaging Technology Co., Ltd are among those being cleared.

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