Foxconn, the Taiwanese contract manufacturer that assembles Apple iPhones among others, plans to invest up to $1 billion in expanding a factory in southern India.
The initiative is a part of Apple’s quiet and incremental production shift away from China as it juggles threats from a Beijing-Washington trade war and the coronavirus crisis.
Foxconn’s planned investment in India, the plant where Apple’s iPhone XR is made, will take place over three years, which is within the time frame for the latest Production-Linked Incentive (PLI) scheme by the Indian government.
The Production Linked Incentive Scheme (PLI) for large-scale manufacturing of electronics proposes a financial incentive to improve domestic production and attract major investments in the supply chain of electronics, including cell phones, electronic components and ATMP (Assembly, Testing, Marketing and Packaging) units.
Previous reports suggested that Foxconn was one of the businesses that had applied to be among the five “foreign champions” of the government to obtain the scheme’s benefits.
Sources suggest that Apple’s clients are faced with a strong request to move parts of the iPhone production out of China. Some of Apple’s other models of iPhones made by Foxconn in China will be manufactured at the plant.
According to the proposal, Taipei-headquartered Foxconn will add some 6,000 jobs at the plant they are investing in. In another state of India, Foxconn is operating a plant that produces China’s Xiaomi smartphones among other brands.
India is the second-largest smartphone market in the world where Apple accounts for about 1% of its smartphone sales and it is considered as more of a status symbol. Being able to build more of its phones within India will help Apple to save on import taxes that play a big role in its pricing.
A tech researcher based in China’s Hong Kong believes that “With India’s labor cheaper compared with China, and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub.”
Having Apple expand its local presence is a boost to the “Make In India” campaign which is a flagship initiative of Prime Minister Narendra Modi that aims to build new jobs.
Samsung, the South Korean brand had earlier announced its decision to produce smartphones to be exported at New Delhi, the Indian capital.
