India changes labour laws so Foxconn can make iPhones faster

Another day, another Apple in India story, and this one puts even more stress on the extent to which the supply chain and India’s government are working together to expedite the shift away from dependency on China.

Working night and day for iPhone

Today’s report explains how Apple and Foxconn have managed to convince government on a national and regional basis to ‘liberalize’ labour laws. What this means in effect is that workers will be able to work more often, and women will be able to work too.

What that means is that at Foxconn’s proposed factories in Karnataka, work will take place across two 12-hour shifts (night and day) and women will be able to work nights in the factories too.

That’s similar to how the working day is structured in China.

The news was first reported in the Financial Times and reflects how Apple, Foxconn and government are working together to ensure India becomes as viable a production hub as it can be. We already know Apple’s partner, Foxconn, plans to manufacture iPhones in a vast 300-acre, $700 million factory situated in Karnataka, Southern India, in Bengalaru.

India’s Silicon Valley is happening

The region is already home to India’s equivalent of Silicon Valley and houses some of the nations most important startups and biggest tech firms.

Apple already has an R&D hub there and Foxconn chairman, Young Liu, visited Bengaluru and Hyderabad last week, with plans to expand manufacturing in both regions.

Foxconn also appears to be involved in developing India’s largest prototyping center, T-Works. This extends to the donation of a complete assembly line for high-end electronic circuit boards, Times of India reports.

During his meeting with Chief Minister Sri K. Chandrashekar Rao, @HonHai_Foxconn Chairman, Mr. Young Liu has announced the company's decision to set up electronics manufacturing facilities in Hyderabad. pic.twitter.com/Epmox5pgfg

— Telangana CMO (@TelanganaCMO) March 2, 2023

Improving production efficiency

The FT cites an anonymous government official who says the moves are part of an attempt to increase production efficiency in India by what they describe as “a big margin”. A Foxconn source apparently called these labour reforms, “crucial for building efficient manufacturing here at scale”.

I’m sure the region’s workers will be thrilled to be able to ‘choose’ a 12-hour night shift to make iPhones for the rest of us, but I’ll be watching to see if the salaries given impact regional average incomes up, or down.

India’s government has also allocated significant funding to training India’s youth to handle jobs across the tech industry over the next three years.

All of this activity reflects two (perhaps three) perfect storms:

• India’s current government is pushing hard to promote manufacturing in what is currently a primarily service-based economy, with lawmakers offering inducements and changing employment protections to nurture additional investment.
• Apple is working furiously to reposition its supply chain in order to build in more resilience, within which it seeks to take as much manufacturing as possible and distribute it outside China.
• In the background, increasing international tension that frankly threatens not just physical supply chains, but also the digital chain.

These strands are igniting India’s tech industry, with locals now openly wondering if the next Steve Jobs may now have their big ideas in India. Which, in some sense, reflects the India spiritual journey which occupied the original Apple co-founder.

Apple is growing in India

Spiritual considerations aside, Apple’s work in India is already delivering benefits. Apple’s market share in India is increasing at an impressive pace, prompting Evercore analyst, Amit Daryanani to say: “There are multiple dynamics at play that will enable AAPL to ramp-up market share in India comparable to what they did in China during the past decade.”

There seems little doubt at this point of the urgency with which Apple is engaged upon this mission. The sheer number of stories emerging from across its supply chain in recent days testifies to this.

In other recent news:

• Apple has decided to change its global sales structure, elevating Ashish Chowdhary to lead Apple’s teams in India.
• Apple VP Lisa Jackson gave an extraordinarily insightful interview in which the company promised to make big investments in carbon neutral supply chain development in India.
• Apple also announced it will work with NGO Frank Water to improve water management in India and Bengaluru.
• More recently, a senior executive of an Apple partner called Goertek made news when he suggested Apple is pushing really hard to get suppliers to set up manufacturing in India.
• That same executive made headlines again a few days later when he suddenly resigned with immediate effect.
• Apple supplier Foxconn announced a massive $700 million investment in building a new manufacturing facility at about the same time.
• That’s raising some friction in China, where Foxconn had to deny claims distributed on social media that the company is dismantling its existing production lines in China’s Shenzhen.

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