iPhone Manufacturing to Boost India’s Economy
Multinational technology company Apple Inc. first launched its smartphone, the iPhone, in 2007 and the company has since grown to hold about 24% of the global market share for smartphone trading. As of late 2022, the Taiwanese firm Foxconn, formally known as Hon Hai Precision Industry Co Ltd., produced an estimated 70% of the world’s iPhones, largely out of its Zhengzhou plant in Central China. As one of Apple’s most lucrative products, the iPhone accounts for around 50% of Apple’s revenue and around 45% of Foxconn’s revenue. Apple and Foxconn are now working to increase iPhone manufacturing in India, which will serve Apple’s corporate interests while also stimulating the Indian economy and easing unemployment by creating job opportunities.
China has long been the backbone of iPhone production. However, Apple’s significant dependence on China has become an increasing concern due to rising labor costs and strict, zero-tolerance COVID-19 policies, which have hampered production since the start of the pandemic. India’s lower labor costs and rising technology manufacturing sector make it an inviting location for production.
The Make in India Initiative
In 2014, Indian Prime Minister Narendra Modi launched the Make in India initiative to encourage investment in various economic sectors and boost employment rates. According to the World Bank, the unemployment rate in India stood at 7.7% in 2021 compared to 4.6% in China. Make in India highlighted electronics manufacturing as a critical area of development for the country and Modi sees great potential in making India a global technology manufacturing hub. The government also introduced Production Linked Incentive Schemes, which provide financial incentives for investing in various sectors, including electronics manufacturing, that are promising for the creation of new jobs.
Job Creation and Gender Equality
Given that India began producing smartphones less than 10 years ago, it is notable that India is now the second-largest mobile phone manufacturer after China. India’s rapid progress helped attract Apple’s attention, spurring the company’s transition into this growing sector. According to current estimates, India will manufacture around 25% of iPhones by 2025.
As part of Apple’s move into India, its key manufacturer, Foxconn, plans to invest $700 million to construct a new factory in the state of Karnataka in Southern India. Planned for a 300-acre site near Bengaluru, Karnataka’s capital and India’s IT hub, the factory is expected to create some 100,000 jobs. The investment demonstrates Apple and Foxconn’s shared commitment to increasing production in India and decreasing reliance on China.
Apple and its collaborators also hope to build women’s hostels near new factory complexes in India. These would provide female workers with safe accommodation and reduce travel times. The goal is to encourage more women to enter the workforce as manufacturing expands in India, thereby strengthening gender equality in India.
Additionally, Apple and the Indian Cellular and Electronics lobby group, which represents the company and its suppliers, are pushing for labor law reforms that would make working hours more flexible. Eager to garner a higher share of global technology production, Indian authorities have been receptive to the proposed reforms. In February 2023, the state of Karnataka passed the Factories Bill, which introduces working hours akin to those of China’s iPhone factories.
The planned reforms include moving from three eight-hour shifts per day to two 12-hour shifts. While full-time weekly working hours will remain capped at 48, overtime allowance will increase from 75 to 145 hours across a three-month period. Women will also be allowed to work night shifts, which is currently prohibited in much of the country. With their written consent and employers’ agreement to fulfill certain security measures, such as ensuring safe transport and restroom facilities, women in Karnataka will be permitted to work between 7 p.m. and 6 a.m.
Such reforms aim to increase the flexibility of work patterns and women’s presence in the workforce while reducing unemployment and encouraging investment in the technological sector in India. Eager for continued economic growth, the Indian government sees Apple’s expansion in the country as an opportunity to create jobs, increase Indian workers’ disposable income and boost overall GDP. In the long term, local sourcing and manufacturing of iPhone components will help further stimulate local Indian economies and lower production costs. Finally, Apple and Foxconn’s demonstrated confidence in India’s technological manufacturing capabilities will encourage further investments.
The Indian government, via the National Sample Survey Organization (NSSO), has not released official poverty statistics since 2011, but other estimates indicate that millions of people in India still endure poverty. Transitioning iPhone manufacturing to India is a mutually beneficial development. Not only will it serve Apple and Foxconn as businesses but it will also strengthen the present and future Indian economy while lifting people out of poverty through job opportunities.
– Sophie Sadera