Foxconn plans massive investment in Indian manufacturing

Posted on 12 Aug 2015 by Michael Cruickshank

Chinese electronics manufacturer Foxconn Technology Group has announced plans for a massive new investment in Indian manufacturing.

The company plans to invest $5 bn into the construction of new electronics manufacturing plants in the subcontinent.

All up, Foxconn has detailed plans to build at least 12 new manufacturing facilities in India by the year 2020. The first of these plants will be built in the western Indian state of Maharashtra.

According to reporting by Forbes, in this first plant Foxconn will assemble and manufacture key components for smartphones, smart TVs and computers.

The investment plan was outlined in a memorandum of understanding between Foxconn and the Government of Maharashtra earlier this week.

This deal, when complete, would be the single largest investment of cash into India’s tech manufacturing sector, and represents a massive shift in the relationship between the two countries.

More and more Chinese companies are looking to shift their manufacturing base to India, with just last week Xiaomi signing a deal with Foxconn to produce some of its new smartphone products in pre-existing factories in the country.

In addition, the Indian government has given security approval for Huawei, another Chinese smartphone manufacturer, to begin operations within the country, however further departmental approval is needed before this can be finalised.

‘Make In India’ initiative

The announcement of these huge investments into manufacturing within India demonstrates the success of Prime Minister Modi’s so-called ‘Make in India’ initiative.

This initiative seeks to encourage foreign firms to move their industrial manufacturing to India through streamlined approvals and high-level government support.

‘Make in India’ is also being helped significantly by rising labour costs within China, leading to manufacturers looking to diversify to cheaper regions such as the Indian Subcontinent.

However, while Indian wages are indeed lower than their Chinese counterparts, the country will need to overcome Chinese advantages in business and supply-chain flexibility.