The Taiwanese manufacturing giant Foxconn which assembles iPhones will start the mass production of iPhones in India from this year. For decades, iPhones has been assembled in China, the global manufacturing hub. PM Modi has invited Foxconn to manufacture the premier smartphones in India. The company manufactures older models at manufacturing unit in Bangalore but the latest model is still produced in China. The iPhone manufacturing company is ready start the trial production before it starts a full scale assembly at Chennai unit. “In the future we will play a very important role in India’s smartphone industry,” said Foxconn Technology Group Chairman Terry Gou. We have moved our production lines there,” he added.
The Chinese smartphone market has saturated and India is now the fastest growing market in the world. Indians bought 14 crore smartphones last year and Apple’s share was just 17 lakh. The company wants a larger pie of the Indian smartphone market which is dominated by mid segment manufacturers like Xiaomi, Vivo, and Oppo. The local production would help the company to push the sales.
The smartphone manufacturing companies like Huawei Technologies Co, Xiaomi Corp, and Apple has started moving manufacturing to India to avoid import duty which ranges from 20-30 percent. The Make In India initiative of Modi government also played important role in establishing in making the country smartphone manufacturing hub. “For Foxconn, the China market for iPhones is saturated, and labor costs are three times higher compared with India,” saidKarnChauhan, a Gurgaon-based analyst at Counterpoint Research. “India is still an emerging smartphone market, it has a lot of potential domestically and could serve as an export hub for the region.”
Foxconn is largest electronics manufacturer in the world and fourth largest Information Technology Company by revenue. The company already manufactures smartphone units Xiaomi and Nokia at the assembly units located in Andhra Pradesh and Tamil Nadu. The company plans to move most of its manufacturing process in India to avoid the impact of ongoing US-China trade war. The company willinvest 2.5 thousand crores to assemble the iPhone X series in Tamil Nadu. The move will create 25,000 jobs in the country and make India a manufacturing hub of smartphones across the segments.
India has overtaken the United States of America to become the 2nd largest manufacturer of smartphones in the world, trailing China. Make in India has turned the tide in India’s favor making India a global hub for manufacturing which is the principal aim of the ‘Make in India’ Policy. In 2014, there were only 2 manufacturing units in India but since the launch of ‘Made in India’ which propelled the scene in an impressive manner, the number has increased to 123 units in 2017.
The reason behind this is that the rising per capita income and prosperity in China have increased labor cost very rapidly.The Chinese companies find it more cost efficient to manufacture in India. Foxconn, the Taiwanese manufacturing giant has also signed an agreement with the state government of Maharashtra, Uttar Pradesh, and Haryana to invest five billion dollars. Acer’s spin-off manufacturing arm Wistron announced agreements with Indian government officials to rent land for local production purposes. The electronics manufacturer, Samsung, Toshiba, Panasonic, and Sony are considering cuts in their investment in China and set up factories in India. So the woes of Chinese manufacturing is not limited to Smartphone companies, it is widespread across all the sectors. As Trump’s ‘Made in America’ rhetoric translates into action, further woes to manufacturing in China is expected. But one thing the Indian government should keep in mind that it has to focus more on land and labor reforms if it wants to take advantage of the big manufacturing move from China to India.