Apple has been in talks with India's government to explore making products locally, the Wall Street Journal reported on Tuesday, as the U.S. firm aims to make deeper inroads in the world's second-largest mobile phone market by users.

Prime Minister Narendra Modi is trying to boost technology manufacturing in the country through his 'Make in India' initiative. His government in June exempted foreign retailers for three years from a requirement to locally source 30 percent of goods sold in their stores.

The Journal said Apple, in a letter to the federal government in November, outlined manufacturing plans and asked for financial incentives.

Local manufacturing would help Apple open retail stores in the country where its iPhones account for less than 2 percent of Indian smartphones sales.

Taiwan's Hon Hai Precision Industry Co Ltd (Foxconn), which makes Apple devices such as iPhones and iPads, has a manufacturing facility in southern India.