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August 10, 2015

Foxconn leads charge into Indian manufacturing

Several companies are moving operations from China and Taiwan to India.

By Alexander Sword

Foxconn, the Taiwan-based company that manufactures Apple iPhones, has signed agreements to launch new manufacturing facilities in India.

An agreement with the western state of Maharashtra will see the company investing $5 billion over five years in a manufacturing facility there, signed at the World Trade Centre in Mumbai on 8 August.

Foxconn will use 1500 acres in Talegaon to manufacture both for the local market and for exports. According to the report in the Times of India, chief minister of Maharashtra Devendra Fadnavis claimed that the plant would generate 50,000 new jobs.

In addition, Xiaomi, the Chinese smartphone vendor which uses Foxconn as a supplier has unveiled the Redmi 2 Prime, its first smartphone made in India at a live event in Visakhapatnam.

A tweet by Hugo Barra, global vice president, showed a picture of him posing in front of a billboard with the words, "Good morning Vizag! Xiaomi is about to take a giant leap forward in India."

He wrote on his Facebook page on 10 August:

"We just unveiled Xiaomi‘s first smartphone made in India — Redmi 2 Prime — at a live event in Visakhapatnam, Andhra Pradesh, with our special guests the Honorable Chief Minister Mr. Naidu and DIPP Secretary Mr. Amitabh Kant. What a huge day for Mi India… So excited!"

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Foxconn and Xiaomi are not the only Chinese technology companies looking to India. Recently, an executive of Shanghai-based smartphone maker Phicomm told Economic Times that the company planned to invest $1 billion in manufacturing in India.

India is attracting more investment as manufacturing costs rise in China. According to the Economist Intelligence Unit, manufacturing labour costs in China are on course to steadily increase, with annual earnings growth at the national level of 12 percent between 2013 and 2020.

Indian Prime Minister Narendra Modi launched the Make in India initiative in September 2014, a programme designed to encourage companies to base their manufacturing in the country.

As the world’s largest electronics contractor manufacturer and third biggest information technology company by revenue, Foxconn undertaking to manufacture in India will be seen as a major boost for the country’s manufacturing.

"There are many local and Chinese brands looking to manufacture devices locally in India to take tax advantages," commented Anshul Gupta, Principal Analyst at Gartner.

"Foxconn’s decision to manufacture devices in India is clearly to meet growing demand. There are huge growth opportunities in India with smartphone segment growing over 40 percent year on year."

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