Apple and its manufacturing partner Foxconn were among the companies behind a landmark liberalization of labor laws in the Indian state of Karnataka last month, according to three people familiar with the matter.
Their successful lobbying for new legislation means that two-shift production can take place in India, similar to the practices of the two companies in China, their main manufacturing base. The law gives the southern state one of the most flexible labor regimes in India as the country aims to become an alternative manufacturing base to China.
The Karnataka move is an attempt to seize the opportunity created by companies seeking to end an overreliance on Chinese manufacturing, following months of disruption from COVID-19 that has rocked global supply chains.
“India is going to become the next big manufacturing hub,” said an Indian government official, who asked to remain anonymous. “When we compare India with other countries…we have to considerably increase our efficiency in terms of increasing labor output.”
Rajeev Chandrasekhar, India’s minister of electronics and computing, said last week that Apple phones would be produced in a new 300-acre factory in Karnataka. Foxconn has not confirmed any factory plans.
The state, a hub for India’s tech industry, last week approved an amendment to its factory law enforcement that allows 12-hour shifts, up from the previous limit of nine hours. It also eased rules on night work for women, who dominate electronics production lines in China, Taiwan and Vietnam but are underrepresented in India’s workforce. The legislation limits the maximum working hours to 48 per week, but also expands the number of overtime hours allowed to 145 over a three-month period, up from 75 previously.
The official said Karnataka had amended its labor law after “a lot of input” from Indian industry lobbies and foreign companies including Foxconn and Apple. Foxconn and Apple declined to comment.
“This is something that we and the customer have been looking for,” said a person close to Foxconn, referring to Apple. “It’s an adjustment that’s crucial to building lean manufacturing here at scale.”
The person said that India, which will overtake China as the world’s most populous country this year, was a promising market that Foxconn could no longer ignore, but that large gaps remained in the investment environment between India and China.
“Being able to run production with two 12-hour shifts around the clock would be a big step in getting us closer to where we need to be,” the person said.
Narendra Modi’s government is trying to promote manufacturing, which still plays a modest role in India’s service economy, under a “Manufacturing in India” push.
Both the central government and Indian states, especially in southern India, are offering incentives to investors in electronics and other sectors in a bid to attract manufacturers looking to diversify out of China.
Foxconn, which currently makes iPhones at a plant in the state of Tamil Nadu, has talked about expanding its operations in Karnataka and the neighboring state of Telangana, but has not elaborated on its manufacturing plans for Apple. However, Foxconn Chairman Young Liu visited the Telangana cities of Hyderabad and Bengaluru in Karnataka last week, in one of the clearest signs yet that the Taiwanese electronics group plans to increase its presence in India.
Apple also has its iPhones assembled in India at plants operated by rival Taiwanese contract manufacturers Pegatron and Wistron.
Additional reporting by Patrick McGee in San Francisco
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