Foxconn Technology said it will start the manufacturing of Apple iPhones in India this year, a shift for the largest assembler of Apple’s handsets that has long concentrated production in China.
Foxconn Technology chairman Terry Gou said that India Prime Minister Narendra Modi has invited him to India as his Taiwanese company plans its expansion in the country.

Apple has had older phones produced at a plant in Bengaluru for several years, but now will expand manufacturing to more recent models. Foxconn is ready to start trial production of the latest iPhones in the country before it starts full-scale assembly at its factory outside Chennai, Bloomberg News reported.

“In the future, we will play a very important role in India’s smartphone industry,” Terry Gou said at an event in Taiwan. “We have moved our production lines there.”

India has become the fastest-growing smartphone market in the world, while China stagnates and Apple loses share to local competitors such as Huawei Technologies and Xiaomi. Apple is a minor player in India, in part because of its high prices. Local manufacturing of iPhones would help the Cupertino, California-based company avoid import duties of 20 percent.

“For Foxconn, the China market for iPhones is saturated, and labour costs are three times higher compared with India,” said Karn Chauhan, a Gurugram-based analyst at Counterpoint Research. “India is still an emerging smartphone market. India has potential domestically and could serve as an export hub for the region.”

It’s not yet clear how Apple’s steps into India will affect its China operations. China has been the company’s most important manufacturing base for years, home to Foxconn’s biggest facilities and hundreds of other partners.

Foxconn already has two assembly sites in Andhra Pradesh and Tamil Nadu, where it makes devices for Xiaomi and Nokia. Locating more production in India would help diversify Apple and Foxconn’s manufacturing footprint away from China amid ongoing trade tensions with the United States.

The Indian assembly line of Foxconn’s Hon Hai Precision Industry would serve local and export markets by the time Apple announces its next iPhone models in September.

Foxconn has a dozen software people in India and plans to increase that to 600, Terry Gou said. “We are the primary assembler after all,” Terry Gou said on Monday. “If our customer wants to boost its scale, it will need to depend on us to grow the comprehensive supply chain.”

Production of iPhones locally would help Apple’s retail push in India. The company needs to meet 30 percent local sourcing rule to be able to open its own stores in the country.