"Apple's intentions to manufacture in Bengaluru will foster cutting edge technology eco system and supply chain development in the state, which are critical for India to compete globally," the government of the south Indian state said in a statement.

A source familiar with the matter told Reuters, however, that no deal, or memorandum of understanding had so far been finalised with the Karnataka government.

The person, who asked not to be named, said if Apple did go ahead with plans to begin assembling the iPhone, it was likely to do so initially at a plant being set up by its Taiwanese manufacturing partner Wistron Corp at Peenya on the outskirts of the tech hub of Bengaluru, Karnataka. Apple was not immediately reachable for comment.

Cupertino, California-based Apple, is keen to assemble its phones in India, one of the world's fastest growing smartphone markets.

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