What just happened? India wants to become the world’s next big manufacturing hub and provide companies like Apple the perfect environment to move the bulk of their production out of China. So much so that local administrations are promoting significant liberalization of their labor laws.
The Indian state of Karnataka is trying to become the new base for iPhone manufacturing outside of China, easing its labor laws to embrace the specific needs of Apple and Foxconn. According to three unnamed people with knowledge of the matter, Cupertino and the Taiwanese giant were the main drivers behind the labor law liberalization that was passed in Karnataka state last month.
The new legislation allows manufacturers to run two 12-hour shifts, which is standard practice in China but a first in India where the previous shift limit was nine hours. The new law also removes some of the restrictions on night work for women, who have a dominant presence in production lines located in China, Taiwan and Vietnam.
As per the amended labor laws, workers in Karnataka can now have a maximum of 48-hour work week and the allowed overtime has increased from 75 to 145 hours over a three-month period. An unnamed official from Karnataka He said The local administration has been given “a lot of input” from Indian industry lobbyists and foreign companies, though both Apple and Foxconn declined to comment.
A source “close” to Foxconn said the new amendments to Indian labor laws are “crucial” to building efficient large-scale manufacturing. Foxconn can no longer ignore India’s ambitions to become a new manufacturing hub for the world’s largest companies, and being able to run daily production in two 12-hour shifts seems like a huge step to bring the Indian labor market “to where we need to be.”
The government led by Prime Minister Narendra Modi is trying to transform India’s service-heavy economy into a manufacturing powerhouse, just in time for his country to become the most populous country in the world. Located in the southwestern region of India, Karnataka provides the fifth largest economy in terms of gross domestic product (GDP) and per capita GDP.
New Delhi and local states are both offering Foxconn and other major companies incentives to host their new factories. Foxconn is currently assembling new iPhones in Tamil Nadu, and the company has already expressed interest in expanding manufacturing operations in the neighboring states of Karnataka and Telangana. No actual details of the expansion have been decided yet, although India’s Information Technology Minister (Rajeev Chandrasekhar) recently said that Apple will produce its iPhones in a new 300-acre factory in Karnataka.
