Apple seems bullish on shifting supply chain base to India with support from its biggest supplier

With the trade tensions between the US and China getting deeper, tech giant Apple is revamping their production and supply chain structures to move out of the dragon’s country. As per reports, Apple’s plans to shift base to other location(s) are in full force. Being supportive of their decision, Apple’s biggest supplier Foxconn Technology Group is planning to invest about USD 700 million in a new plant in India to augment local production.

The decision follows many Apple’s partners setting up shop in India, years of work on the part of Apple to get business moving in the nation, and the appearance of some big names from India’s manufacturing industry in the Apple supply chain. In fact, according to Kazuyoshi Yoshinaga, Deputy Chairman of Airpods maker GoerTek, clients frequently ask him about expansion plans in India.

Foxconn’s latest contributions

The Taiwan-based firm Foxconn, known for its flagship iPhone component production, is now planning to build a new 300 acre plant to manufacture iPhone parts in India, reportedly close to the airport in Bengaluru, Karnataka. The plant is also expected to assemble Apple iPhones. Meanwhile, Foxconn may also use the site to produce some parts for its electric vehicle business.

This plant is likely to be the biggest single investment by Foxconn in India to date, and a somewhat big blow to China’s reputation of being world’s largest product of consumer electronics. The company’s decision to shift production will help India to close the tech gap with China.

Foxconn’s new production site is expected to create nearly 100,000 jobs in India considering that their facility in China employs a workforce of nearly 200,000. The figure also tends to increase during the peak production seasons.

Last year, we reported that Foxconn will be producing the latest generation of iPhones in Chennai.

Challenges

Undoubtedly, India is making its business operating environment increasingly conducive by the day to attract international investment. For instance, Foxconn is being given various financial incentives for producing in India. Apple’s and its supply chain partners’ work in India has been extensive lately – opening factories, opening its own stores, and a steady increase in sales of products from across the Apple ecosystem. However, there are a still many challenges that need to be overcome.

To start with, India is bureaucratically complex, and while the government has made big process changes over the last few years, as well as introduced an extensive PLI program to attract and retain international manufacturers. However, regional problems – like a varied tariff system, uneven distribution of infrastructure, and bureaucratic hindrances & red-tapism – remain.

Another challenge is that of skilled and educated workforce. We know India has a great education system. You really don’t need to dig deep to find high-placed, highly effective leaders – but factories don’t just need leaders, they need educated workers, too. Considering that access to education in India is not evenly distributed, India’s literacy rate is 74% in comparison to China’s 97%. Even though the Government is augmenting its focus on education and workforce skilling, it will take at least a few years for the results to reflect.

Leave a Reply

Your email address will not be published. Required fields are marked *

LATEST NEWS