India’s appeal to the likes of Apple as a “China plus one” manufacturing hub may depend on how the country and foreign investors resolve one glaring issue: how and where to get enough workers in the right place.
In China, hundreds of millions of migrant workers played a crucial role in the country’s rise as the “workshop of the world”. Executives hoping India will emerge as a parallel manufacturing centre as geopolitical tensions rise are waiting to see whether its workers will prove equally willing to leave their homes and families for a job that includes spending long periods with a dormitory bed as their only private space.
“When we started manufacturing in [the Chinese city of] Shenzhen all workers came from far away, so there was the necessity to build accommodation for them from the very start,” said a person close to Foxconn, the biggest manufacturer of Apple’s iPhone, which has said its manufacturing ambitions for India extend to new products such as electric cars.
“In India, the main model so far was bringing workers from their hometowns with shuttle buses, but as things get scaled up that is just not sustainable.” Foxconn declined to comment.
The numbers involved can be vast: Foxconn’s iPhone plant in the Chinese city of Zhengzhou, the world’s largest, has at peak times employed up to 300,000 people.
The issue of worker accommodation is of special urgency because of the role women play in the electronics industry. They account for the bulk of the workforce in electronics in longer-established manufacturing hubs such as China and Vietnam, where workers’ dormitories are a central part of companies’ focus, alongside regulatory issues such as trade tariffs and labour law.
India has fewer women in factory work than most other Asian countries because of safety issues around commuting and social stigmatisation of women’s work, making the issue of worker accommodation particularly pressing.
“There’s a whole range of regressive social and cultural norms that constrain women from working in industry,” said Radhicka Kapur, a professor at the Indian Council for Research on International Economic Relations. “But that also means there’s a tremendous opportunity here to engage women.”
As the likes of Apple and Foxconn shift more production to southern India, companies and local officials are making plans for dormitories that between them will accommodate tens of thousands of beds.
In Tamil Nadu, a hub of India’s electronics industry where Foxconn has its main factory assembling iPhones for Apple, a government agency is building multiple blocks to accommodate about 18,000 women, local officials told the Financial Times. Foxconn is expected to take up all of this capacity, according to people close to the Taiwanese company. Foxconn expects to finish construction of another dorm in Tamil Nadu in the coming months that can accommodate 20,000 more workers.
“Affordability at scale is something where the state needs to step in rather than leaving it to market forces,” Vishnu Venugopalan, chief executive of Guidance Tamil Nadu, the state’s investment promotion agency, told the FT. “I am sure we will need many more such projects.”
In Karnataka, home to India’s IT capital Bengaluru, where Foxconn has broken ground on another plant, the state has formulated a draft policy to support and build dormitories. “The investors are reviewing the policy and shall come up with feedback for the government,” said Priyank Kharge, the state’s IT minister.
Karnataka, Kharge said, was aiming to secure “seamless employment generation for its people” and solutions for workers that would reduce the commuting time to the facilities where they work.
In Telangana, one of India’s most business-friendly states, the local government allows investors to devote 20 per cent of the land where they are building factories to dormitories, sparing them the cost of acquiring additional property.
Foxconn is building a factory to make Apple’s wireless AirPod earphones through its subsidiary FIT from next year. Its factory site at Kongara Kalan near Hyderabad’s airport is expected to include a dormitory.
Foxconn’s plans to build more housing in India highlight its expansion in the world’s most populous country and the potential hurdles ahead. As of June, the company’s total headcount in India was just 50,000, compared with 700,000 to 1mn employees in China.
On Monday, Foxconn said it would spend about Rs128bn ($1.5bn) to build additional factory capacity in India — in line with chair Young Liu’s statement at an investor conference in August that the company would invest “several billions of US dollars” in India.
Taiwanese media reported that the investment would flow into capacity for the first new iPhone model production in India. Foxconn did not respond to a request for comment on the report or which of its expansion plans the investment was related to.
But some industry observers have voiced scepticism that Apple and its main supplier will be able to scale up in India, in part because of the challenges around worker accommodation and securing women’s work.
“A crucial condition for managing the scale-up in India is providing enough accommodation for workers,” said a person familiar with Foxconn’s plans.
Executives at Foxconn and Taiwan’s other contract manufacturers have repeatedly said it would be impossible to replicate in India or Vietnam the mass production structures they built in China, mainly because workers there are much less willing to leave their families and live in dormitories.
“Generally, people in India expect to commute to work from their homes and, when their shift is over, go home and have dinner with their family,” said an executive at Pegatron, another iPhone supplier. “That limits the scale of any single factory to a few tens of thousands.”