Foxconn’s Billion dollar investment in India is Apple’s quiet shift from China: report

Foxconn's billion-dollar investment in India is Apple's quiet shift from China: report - We The World Magazine

Apple Inc., the world’s most valuable technology company has reportedly pushed one of its largest manufacturers, Foxconn, to invest heavily in India, which will make 6k jobs in the coming years.

Taiwan-based contract manufacturer, Foxconn, is one of apple’s chief suppliers of finishes iPhones, and already operates a mega factory in Chennai and another in Madhya Pradesh. The south Indian plant chiefly deals with Apple’s iPhones, while the other makes phones for the like of Xiaomi Corp., Oppo, VIVO among others.

As it comes, the company will now pump-in a whopping $1 billion (Rs. 75,15,87,00,000) for boosting its iPhone manufacturing facility in South India, Reuters reports.

News Agency Reuters, which first reported the case, cited two sources that have confirmed Foxconn’s plans to pump in the massive sum, an amount that has never been reported earlier.

The news agency noted this investment is a “quiet and gradual production shift by Apple away from China” as the mega technology giant, like other global businesses, is affected by the worsening relationship between Beijing and China, following the COVID-19 outbreak in Wuhan, China.

Foxconn’s Billion dollar investment in India is Apple’s quiet shift from China (Image courtesy of Nadkachna via Commons)

“There’s a strong request from Apple to its clients to move part of the iPhone production out of China,” one source with ‘direct knowledge’ on the matter told Reuters.

Both Foxconn and Apple has not commented on the recent development upon request. The second source told Reuters that Foxconn will push the billion-dollar commitment over a course of three-years, in their Sriperumbur plant, some 50 km away from Chennai. Foxconn’s Sriperumbur plant manufactures Apple’s cost-effective offering the hugely popular iPhone XR.

Both the sources, under the condition of anonymity, have also hinted that Apple will seize making many iPhone models that are currently being made in China, for the sake of the Indian plant.

Only one percent, but potentially ripe

The investment report comes at a time when India, under the Narendra Modi government is heavily pushing international investment in terms of manufacturing in the country. It started with the outbreak of COVID-19, prompting many major international players to consider moving out of China, which was shattered from the outbreak.

India, being one of Asia’s fastest growing economies, and immediate neighbour of China, with an on-par human resource, is turning to cash in the paranoid over China since the outbreak of COVID-19.

However, what invoked India to further ramp-up the nation’s stance as a lucrative global investment hub was the Galwan valley incident, where Indian and Chinese soldiers fought a bloody, but arm-less battle over the border issues, killing a least 20 Indian Army soldiers.

Foxconn’s move also comes at a time when India has announced a Rs 41,000-crore production-linked incentive (PLI) scheme (via Gazette Notification No.CG-DL-E-01042020-218990 dated April 01, 2020) that calls for Large Scale Electronics Manufacturing in the country in return for “an incentive of 4% to 6% on incremental sales of goods manufactured in India.”

Foxconn operates two manufacturing facilities in India, one near South Indian city of Chennai and the other in Madhya Pradesh. Chennai plant primarily manufactures Apple’s iPhone XR which is popular in India given its competitive premium pricing (Image courtesy of @Mariappan_journ via Twitter)

This will apply to electronics manufacturing “covered under target segments, to eligible companies, for a period of five (5) years subsequent to the base year as defined.”

According to the Ministry of Electronics and Information Technology, India’s domestic electronic hardware manufacturing sectors face a disability of 8.5-11% on account of inadequate infrastructure, lack of quality power, logistics, limited design capabilities among other reasons. It also states India’s electronic manufacturing scene “faces a lack of a level playing field vis-à-vis competing nations.”

Applications for the PLI scheme were made open from last month, and according to Financial Express, Foxconn was among the other applicants keen for the opportunity and has already applied for under two names.

While Apple with its premium offering makes just 1% of India’s smartphone market – the second-biggest in the world -nonetheless, building more iPhones in India will allow Apple to slash down the import duties that make the iPhones pricier.

Economy recovering

Speaking at the 7th SBI Banking and Economics Conclave, Reserve Bank of India governor, Shaktikanta Das said the nation’s economy has started to flourish in the post-lockdown scene.

“Indian economy has started showing signs of going back to normalcy after easing of restrictions,” governor Das said Saturday.

Prior to the Banking Conclave, PM Modi echoed the same sentiments about the Indian economy seeing the ‘green shoots’ of recover post reopening, in an open virtual address to the nation on July 9th.

“Friends, India remains one of the most open economies in the world. We are laying a red carpet for all global companies to come and establish their presence in India,” PM Modi said in an address in English.

“Very few countries feel of the kind of opportunities that India does today,” he echoed.

(Cover image courtesy of Apple Inc. via