Apple and Foxconn, the technology giant's manufacturing partner, have successfully lobbied for landmark labour law reforms in the south Indian state of Karnataka. The new legislation will allow the manufacturer to enable two-shift production, which is similar to how it operates its production in China. The move is part of India's efforts to become an alternative manufacturing hub to China, following COVID-19 related disruptions to the global supply chain.
Karnataka already has one of the most flexible working regimes in India. Bengaluru, also known as India's silicon valley, houses some of the world's leading technology companies and start-ups, making it a hub of innovation and entrepreneurship in the country.
According to an anonymous Indian government official, "India is due to become the next big manufacturing hub". However, the country needs to "increase by a big margin our efficiency in terms of increasing the work output," he added. Last week, it was reported that Foxconn had plans to invest $700 million to create a brand new manufacturing plant in Bengaluru.
Another anonymous source close to Foxconn said that the labour reforms were "crucial for building efficient manufacturing here at scale". India, which this year will overtake China to become the world's most populous country, is a promising market that Foxconn can no longer ignore, the source added. However, there are still significant gaps in the investment outlook between the two Asian countries.
Indian Prime Minister Narendra Modi's government, under its "Make in India" initiative, is attempting hard to promote manufacturing in the service-based economy. Both the central and the state governments, particularly in the south, are offering incentives for investors in electronics and other manufacturing sectors that are looking to diversify away from China.
During his meeting with Chief Minister Sri K. Chandrashekar Rao, @HonHai_Foxconn Chairman, Mr. Young Liu has announced the company's decision to set up electronics manufacturing facilities in Hyderabad. pic.twitter.com/Epmox5pgfg
— Telangana CMO (@TelanganaCMO) March 2, 2023
Currently, Foxconn assembles iPhones and other Apple products at its plant in Tamil Nadu, which was started back in 2017. There have been several indications that the company intends to expand its operations in the nearby states of Telangana and Karnataka. Foxconn's chairman, Young Liu, visited Bengaluru in Karnataka and Hyderabad in Telangana last week, providing clear indications of the company's serious intent to increase its manufacturing presence in India.
Source: Financial Times
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