Foxconn, the world's largest contract manufacturer for electronics, has firmed up plans to invest up to $5 billion (around Rs 32,000 crore) in India as it looks to make the country a parallel manufacturing hub to China for export to key markets across Europe and the US. A top official at the Taiwanese company said Foxconn will ramp up Indian operations in an “exponential manner“, the confidence coming from the implementation of GST as well as imposition of an import duty on mobiles phones that would discourage sourcing from China and other foreign locations. “India is already high on our priority list, and we now plan to step up investments and business here by opening new factories and expanding the manufacturing footprint,“ the official told TOI, requesting anonymity .
Foxconn chairman & CEO Terry Gou has already committed more investments in India during his visit here, and has also spoken about partnerships with local players and industrial groups.
The decision to impose an import duty on phones and other key components such as chargers and batteries is a “confidence booster“ for the company and its supplier partners, the official said.“The real investments will start to flow in after this year.“
After the government introduced tax benefits for companies making phones locally around two years ago, there has been an increase in domestic sourcing against import of fully-built units from China.However, there was uncertainty in the industry on whether the differential -around 10% benefits for local manufacturing -would be maintained in the GST era. On Saturday , the government imposed a 10% customs duty on phones and key parts such as chargers, headsets, batteries and USB cab les, a move that the industry believes will spur investments in local manufacturing.
The expansion will create massive employment opportunities in the country , the official said, adding that the company is in serious talks with many state governments. States such as Maharashtra, Uttar Pradesh, Tamil Nadu, Haryana and Telangana are on the radar.
A large part of the investments could be directed towards setting up of a display fab unit. “This alone can see us invest around $3 billion.“ Apart from this, around $250 million would be directed towards mechanics such as CNC. “The company will also invest in lithium-ion cell factory and facilities for printed circuit boards (PCBs) which are used in manufacture of devices.“
Foxconn has a sizeable capacity in India and can produce up to four million devices per month. “This was done as part of the preliminary investments. The big investments will happen now, and we plan to push up the manufacturing capacity to at least 10 million units per month in the first phase, while having a healthy supplier eco-system.“
Foxconn manufactures phones for companies such as InFocus, Oppo, Xiaomi, Nokia and Gionee from its existing facilities in India. The official said that Foxconn will look at “vertical integration“ for its operations in India. Elaborating on export plans, he said that talks are on with the commerce ministry to ensure that making in India for the world is hassle-free. “We want a model where we get benefits of an SEZ in a domestic tariff area.India can be a large manufacturing base, just as China.“
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