Foxconn to invest $5B to set up first of up to 12 factories in India

Foxconn is responding to India's bid to attract manufacturers to the country

As part of its plan to set up to 12 manufacturing facilities in India by 2020, contract manufacturer Foxconn Technology Group is investing US$5 billion in a factory and other facilities in the western Indian state of Maharashtra.

The Indian government has been coaxing foreign companies, including smartphone makers, to set up manufacturing units in India under its "Make in India" program.

A number of smartphone makers are planning to make the devices in the country, with Chinese maker Xiaomi expected to announce its first phone manufactured in India on Monday.

The government recently gave security approval to Huawei Technologies' plans to set up a manufacturing facility for network equipment in the country, though the facility still needs final approval from the ministry of commerce as it is a Chinese company, according to sources close to the matter. India and China have a border dispute.

Foxconn and the government of Maharashtra have entered into a memorandum of understanding to build a large electronics factory in the state with an investment of $5 billion, which would create employment for at least 50,000 people, state chief minister Devendra Fadnavis said after the signing of the agreement at which Foxconn CEO Terry Gou was present.

For the contract maker, India could present an opportunity to build products like smartphones both for the booming local market and for global customers, if it is able to iron out the country's significant infrastructure bottlenecks.

The maker of a variety of products for various companies, including the iPhone, already employs over a million workers in China, where it has factories across the country.

But the company has faced labor shortages in China, as many workers are simply looking for the highest wages possible, and are happy to leave for better jobs. Gou has even said that he expects fewer young Chinese workers to enter his factories in the future.

To expand its manufacturing base, Foxconn is developing robots, and looking at setting up factories in India and Indonesia.

On Saturday, Gou said Maharashtra had strong talent and innovation centers. He did not disclose what products the company would make at the factory in the state, describing it as "business secret information." Gou added that the investment in Maharashtra would be over a period of five years.

Foxconn said in a statement that the investments in Maharashtra will be in the areas of manufacturing, research and development, and other "strategic capabilities," and to tap into the pool of local talent in the technology and manufacturing sectors.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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