Foxconn pledges $5b investment in India amid rising Chinese labour costs

Taiwanese manufacturer Foxconn which produces a variety of Apple products announced plans to invest as much as US$5 billion in India's Maharashtra state as labour costs in China continue to rise.

"Made in India" on high-tech gadgets is expected to become a future norm after Foxconn inked a US$5-billion contract on Saturday that aims to build a manufacturing facility in the western Indian state of Maharashtra over the next 5 years.

The deal, which is one of the largest foreign direct investments seen in the history of India, comes amid a booming domestic Indian market as well as a pricier labour costs in China, which became an electronics production powerhouse due to its relatively cheaper labour.

Foxconn founder Terry Gou and Maharashtra's Chief Minister Devendra Fadnavis jointly announced the deal over the weekend after signing a memorandum of understanding on the weekend, according to a Sina news report posted on Monday.

The Taiwanese manufacturer will look for local partners to build the proposed factory in Maharashtra, according to Gou, who had said in New Delhi on August 4 that Foxconn also seeks for opportunities to set up manufacturing plants in other Indian states.

Despite Foxconn's major clients including Apple, Blackberry, and Xiaomi, Gou declined to disclose whether the newly proposed production plant in India is designated to make smartphones when operational.

Foxconn's new move in India also mirrored the fact that rising wages and energy costs have made China a less desirable place for production. A global manufacturing cost-competitive index initiated by Boston Consulting shows China has climbed to 96 this year, with the US benchmarked at 100, which means the costs in making goods have been greatly narrowed between China and the US, said Sina news.

Besides Foxconn, other Chinese heavyweights have also expressed interests in India as the world's second-most populated country has seen an explosive growth in smartphone demands over the years.

In mid-July, Huawei Technologies confirmed that it has been granted a key approval from the Indian government to make handsets in country. Huawei expects to boost handset sales in India through setting up a new manufacturing base in the country, a way to offset its lackluster sales prospects in its home market.

In a recent conference call, Apple's CEO Tim Cook said the US tech giant's income in India surged 93 percent during the last quarter, outstripping the 87 percent growth registered in China, according to an earlier Chinese news report.