Foxconn's $5-bn investment in Maharashtra remains a mirage

Maharashtra is waiting for its largest foreign direct investment of $5 billion, 14 months after Terry Gou, founder of Taiwanese electronics contract manufacturer Foxconn, committed himself to transforming electronic manufacturing in the state.

Foxconn is yet to submit its land requirements to the Maharashtra government to set up its factories. It has also not begun work on an iPhone assembly unit in Navi Mumbai, slated to open in August.

Maharashtra Industrial Development Corporation (MIDC) officials say they do not have a new timeline for the Navi Mumbai plant. They are also unaware of Foxconn’s requirement of land notified in Chakan-Talegaon near Pune and in Khalapur in Raigad district for new factories and research facilities.

MAKE IN INDIA PLAN

• In one-and-a-half years, Foxconn has scaled up production to one million units for smartphone makers
• It employs over 10,000 workers
• Plans to add another unit with 3,000 employees
• Plans to set up 7 units in India

“I don’t think Foxconn had any intention of investing $5 billion in the state,”said Alberto Moel, research analyst at investment management firm Sanford C Bernstein. Moel, based in Hong Kong, tracks technology firms. Foxconn did not respond to a questionnaire sent on October 13.

MIDC officials are also jittery that Foxconn may look southwards to expand production in India. The Tamil Nadu government has already made a pitch to Foxconn to reopen the Nokia plant, but Gou wants a waiver of all dues and fresh  incentives. For Foxconn, a unit in Chennai could be a better base than in Maharashtra, but Tamil Nadu government officials say there has been no progress on this front.

To be fair, Foxconn is expanding in India. In the one-and-a-half years since it set shop in Sri City in Andhra Pradesh, Foxconn has scaled up production to one million smartphones for companies like Xiaomi, Lava, Micromax and Asus.

The firm employs over 10,000 workers and plans to add another unit with the potential to employ over 3,000 people. People familiar with Foxconn's plans say the firm wants to set up seven units in India, but decision will be taken in Taiwan.

“It is bullish on India because of the smartphone opportunity,” said an industry executive who has met Gou in his office in Taipei.

India’s billion strong mobile subscribers has attracted 40 electronics and mobile manufacturing companies to the country. The government also wants to promote India as an export hub for mobiles. Foxconn is the biggest manufacturer for Apple, the world's largest smartphone maker, and could follow its client to India. But, Apple’s plans to produce in India, a growing market for its high-priced smartphones, are not clear after the government rejected its proposal to make refurbished iPhones in the country.

“If its customers (Xiaomi, OnePlus, Apple) want to sell in India and need to assemble in India, Foxconn will likely make the necessary investments,” said Moel.  “It is not a matter of appetite, it is purely business.”