SOURCE / INDUSTRIES
Foxconn refutes report on India plans
Challenges persist for factories in S.Asian nation
Published: Jan 08, 2020 09:13 PM

Workers are seen at a workshop in Longhua science and technology park of Foxconn Technology Group in Shenzhen, south China's Guangdong Province, Feb. 22, 2019. (Xinhua/Mao Siqian)

Foxconn Technology Group, the world's largest contract manufacturer of consumer electronics, has refuted a media report about the cancellation of its Indian investment, according to a company statement, but analysts noted that challenges persist for India's manufacturing upgrade.

The Taiwan-based company's statement came after a report from thehindu.com, which cited Maharashtra Industries Minister Subhash Desai as claiming that the company is canceling plans to invest in the state due to an internal dispute with Apple.

The project in question, which proposed to set up a manufacturing unit in India's Maharashtra state, was seen as part of India's ambition to build itself into a manufacturing powerhouse. However, James Yan, research director at Hong Kong-based Counterpoint Research, noted that India still needs to combat challenges in the provision of basic resources and a skilled workforce to contend with its global competitors, including China. 

"The report, which said the group is in disputes with its clients regarding the establishment of a plant in India, is not true," the company told the Global Times in a statement on Wednesday. "Our local production with major clients is running smoothly."

According to Desai, plans for Foxconn to invest in Maharashtra are "not coming through" and will not materialize in the future despite the Indian government's efforts, due to "prevailing global economic conditions, better performances by [India's] competitors and internal disagreements with Apple."

Foxconn proposed a $5 billion investment in the project, which had been expected to create 50,000 jobs by 2020, according to a report from the Times of India. It signed a memorandum of understanding with the Indian government in 2015, planning to set up 10-12 facilities producing consumer electronics in India by 2020.

The Indian government previously announced that Apple is expanding operations in the country as part of Modi's "Make in India" drive, including plans to manufacture Apple chargers and other components over the next five years, according to a report by the Reuters, citing India's technology minister. 

However, Yan said that challenges persist in the process of making India a powerhouse of manufacturing, due to a lack of industrial infrastructure and skilled labor.

"Basic resources, such as water and electricity, and skilled labor are key in setting up manufacturing units in India, but ... availability issues might still exist in India, as opposed to the mature manufacturing system in countries like China," Yan said.

Foxconn began setting up manufacturing units on the Chinese mainland in 1988, and it is now the major assembler for Apple's products, with more than 90 percent of iPhones assembled by Foxconn in China, Yan said. 

"Compared with China, India is lacking in the capacity to supply a large quantity of high-end devices, such as one-off delivery of more than 20 million of the latest iPhones," Yan said. "It will take quite some time before India can cultivate the ecosystem to produce related components as well."