How southern states will benefit from Apple supplier Foxconn's China+1 strategy

Liu also made it a point to meet the leader of opposition and former Congress president Rahul Gandhi, as Foxconn is eyeing expansion in four key southern states: Karnataka, Tamil Nadu, Andhra Pradesh and Telangana. The Taiwanese company has already invested around $10 billion in these states. 

China+1 strategy

As global companies adopt the China+1 strategy to diversify their production and reduce their reliance on China, Foxconn, one of Apple's largest suppliers, has swiftly expanded its presence in India. This expansion aligns with India’s increasing demand for premium smartphones, making it the world’s second-largest smartphone market.

Liu is known for his 3+3 strategy: three industries (electric vehicles, digital health and robotics) and three major technologies (artificial intelligence, semiconductors and next-generation communication technologies). Foxconn is looking to expand its manufacturing facilities in India, focusing on electric vehicles (EVs), digital health, and electronic components.

Liu, who attended the Semicon India conclave in June last year, met Modi at the event. "PM Modi once mentioned that IT stands for India and Taiwan. PM, Taiwan is and will be your most trusted and reliable partner. Let's do this together," he said while addressing the event.

Southern states rolling out red carpet

India is also capitalising on the China+1 strategy for supply chain diversification in the post-pandemic world, and the southern states are frontrunners in attracting these investments. These states are rolling out the red carpet for firms like Foxconn to create an ecosystem for electronics manufacturing following their success in software exports.

Southern states appear to be leaving no stone unturned in their efforts to attract more investments from Foxconn. This includes amending labour laws to extend working hours and permit night shifts for women workers, developing industrial housing facilities similar to those in China, and providing skilled labour, infrastructure, and a supportive ecosystem. State governments are also streamlining clearances, boosting inter-departmental coordination, and ensuring access to land, water, power, and good law and order.

Liu met three chief ministers: Siddaramaiah of Karnataka, A Revanth Reddy of Telangana (both from the Congress) and MK Stalin of Tamil Nadu. DMK leader Stalin is part of the Congress-led INDIA bloc. Separately, Foxconn India representative V Lee met with Andhra Pradesh IT minister Naresh Lokesh (TDP is a key alliance partner in the NDA-led Union government) in Amaravati on August 19 to discuss investment plans.

Also read: FM Sitharaman allocates Rs 15,000 crore for Andhra Pradesh infrastructure, development of Amaravati

Reddy met Liu in New Delhi and made an investment pitch. He also invited Liu to visit Hyderabad and consider setting up a new facility in Future City, his pet project. Liu said, "Hyderabad has the potential to expand in all sectors, including industrial and service sectors." The groundbreaking ceremony for Foxconn's 200-acre manufacturing unit in Kongara Kalan, Rangareddy district, took place in May 2023. The first phase, covering 1.6 million sq ft, is nearing completion and is expected to start operations soon. Reddy is planning a Future City, about 50 km from Hyderabad in Rangareddy district, to become the fourth TI-centric city after Hyderabad, Secunderabad and Cyberabad.

Also read: Foxconn eyes Hyderabad investment, Chairman Young Liu meets CM Revanth Reddy

Liu flew to Bengaluru and was welcomed by two ministers—industries minister MB Patil and IT-BT minister Priyank Kharge—as well as senior government officials at HAL Airport. At a dinner hosted bySiddaramaiah and deputy chief minister DK Shivakumar, Liu was offered all assistance from the state government and was urged to consider investing in other sectors, including the fab industry.

Also read: Foxconn chief meets Karnataka CM; Industries minister says Apple supplier has extensive investment plans for state

Foxconn is setting up an iPhone assembly plant under Project Elephant in Karnataka. The company has acquired 300 acres of land in the ITIR Industrial Area, located in Doddaballapur and Devanahalli taluks of Bengaluru rural district. The project, with an investment size of Rs 22,000 crore, is expected to generate over 40,000 jobs.

Responding to Siddaramaiah, Liu said: “Our investment will not stop here..We plan to explore other sectors in the future as well. The manufacturing unit in Karnataka will soon become the second-largest Foxconn plant, after our unit in China.”

Also read: Foxconn's Karnataka facility set to become second-largest after China plant, says CEO Young Liu

Sources said the state government also urged Foxconn to invest in Beyond Bengaluru clusters, including Mysuru and Tumakuru. Foxconn officials are expected to visit these locations to scout sites for potential EV production lines.  Patil said, "Foxconn has extensive investment plans for Karnataka, and this visit is part of detailed discussions related to those plans."

In 2023, the Karnataka legislature passed the Factories (Karnataka Amendment) Bill, 2023, which extends overtime work schedules from nine to 12 hours per day, with a 48-hour work week, and permits women to work night shifts. Officials said that this amendment was aimed at competing with countries like China, Vietnam and Taiwan and to attract firms like Foxconn to the state. Following this, Tamil Nadu also proposed similar legislation but was forced to hold the bill due to opposition from labour unions.

In Tamil Nadu, state industries minister TRB Rajaa received Liu at Chennai airport. The minister drove the chairman to the venue for the inauguration of the industrial housing facility in Vallam Vadagal near Sriperumbudur, around 40 km from Chennai airport. Stalin inaugurated the Rs 700-crore facility, which spans 20 acres and was built by the State Industries Development Corporation. The facility is designed to accommodate 18,720 working women.

Also read: Tamil Nadu to unveil industrial housing facility for workers, similar to China; Foxconn chief to attend inauguration on Aug 17

Tamil Nadu government sources said the industrial housing facility is modelled after projects in China and Vietnam. Foxconn implemented a similar model in China, providing worker accommodations near its factories and managing food and medical provisions to boost production.

Stalin said that the state is home to 42 percent of the country’s female workforce and is also the second-largest economy in India.

Also read: Foxconn hires regardless of gender; women form key workforce in Tamil Nadu: Young Liu

“Foxconn’s largest footprint in India is in Tamil Nadu. This industrial housing facility in Vallam Vadagal will be home to thousands of women joining Foxconn from various regions in India,” Liu said at the event. Liu said they have plans to set up a battery energy storage system unit in India. “Foxconn has invested $10 billion in India so far, and we plan to invest more in the coming year,” Liu said.

Foxconn established its first Tamil Nadu factory in 2017, assembling Apple iPhones at its Sriperumbudur facility with around 40,000 employees. Last year, it pledged to invest Rs 1,600 crore in a new mobile components unit in Kancheepuram district.

Meanwhile, Andhra Pradesh IT Minister Naresh Lokesh met with Foxconn India representative V Lee in Amaravati on August 19. "I was pleased to learn about Foxconn's plans in India to develop more manufacturing facilities across EVs, digital health, and electronic components. We will provide all necessary facilities for Foxconn to develop a ‘manufacturing city’ that will create more jobs. Our government believes that the era of Ease of Doing Business (EODB) is over. The Speed of Doing Business (SODB) is the new mantra—and we will aim to move the fastest to create industrial zones for Foxconn and other large global manufacturing firms," he wrote on X (formerly Twitter) after the meeting. Bharat Foxconn International Holding (formerly known as Rising Stars Mobile India) has a unit in Andhra Pradesh’s Sri City, which manufactures Xiaomi products.

Foxconn is also expanding its iPhone production facility, setting up a chip plant in a joint venture with HCL Group, establishing an EV manufacturing unit and producing Apple AirPods. In 2022, the Union government approved Rs 357.17 crore for Foxconn India and Rs 58.29 crore for Padget Electronics, a subsidiary of Dixon Technologies, under the production-linked incentive (PLI) scheme for mobile phones. Under the Union Ministry of Electronics and Information Technology, the PLI scheme aims to establish India as a global leader in electronics.

Also read: Govt approves Rs 357 crore for Foxconn under PLI for mobile phones