India’s appeal to the likes of Apple as a “China plus one” manufacturing hub may depend on how it and foreign investors solve a glaring problem: how and where to get enough workers in the right place.
In China, hundreds of millions of migrant workers have played a crucial role in the country’s rise as the “workshop of the world”. Executives hoping that India will emerge as a parallel manufacturing hub amid rising geopolitical tensions are waiting to see whether its workers will prove equally willing to leave their homes and families for a job that involves spending long hours with a dormitory bed as their only private space.
“When we started manufacturing in [the Chinese city of] Shenzhen, all the workers came from far away, so there was a need to build accommodation for them from the beginning,” said a person close to Foxconn, the largest maker 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 has been to bring workers from their home towns with shuttle buses, but as things scale up, that is just not sustainable.” Foxconn declined to comment.
The numbers involved can be huge: Foxconn’s iPhone factory in the Chinese city of Zhengzhou, the world’s largest, employed up to 300,000 people at peak times.
The issue of worker housing is particularly pressing because of the role women play in the electronics industry. They make up the bulk of the electronics workforce in longer-established manufacturing centres such as China and Vietnam, where worker dormitories are a key focus for companies, alongside regulatory issues such as trade tariffs and labour laws.
In India, fewer women work in factories than in most other Asian countries, due to safety issues around commuting and the social stigma of women’s work, making the issue of worker housing particularly pressing.
“There’s a whole set of regressive social and cultural norms that prevent women from working in industry,” says Radhicka Kapur, a professor at the Indian Council for Research on International Economic Relations. “But it also means that there’s a huge opportunity here to engage women.”
As companies like Apple and Foxconn shift more production to southern India, companies and local authorities are making plans for dormitories that will collectively provide 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 several blocks to house about 18,000 women, local officials told the Financial Times. Foxconn is expected to use all of that capacity, according to people close to the Taiwanese company. Foxconn expects to complete the construction of another dormitory in Tamil Nadu in the coming months, which can accommodate another 20,000 workers.
“Affordability on a large scale is something where the state needs to step in and not leave 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. “Investors are reviewing the policy and will provide feedback to the government,” says Priyank Kharge, the state’s IT minister.
Karnataka, says Kharge, wants to ensure “seamless employment generation for its people” and solutions for workers that reduce the time spent commuting to the facilities where they work.
In Telangana, one of India’s most business-friendly states, the local government allows investors to use 20 per cent of the land on which they build factories for dormitories, saving them the cost of acquiring additional land.
Foxconn, through its subsidiary FIT, is building a factory to manufacture Apple’s AirPod wireless earphones from next year. The factory site at Kongara Kalan, near Hyderabad 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 employed just 50,000 people in India, compared with 700,000 to 1 million in China.
On Monday, Foxconn said it would spend about Rs128 billion ($1.5 billion) to build additional factory capacity in India – in line with chairman Young Liu’s statement at an investor conference in August that the company would invest “several billion US dollars” in India.
Taiwanese media reported that the investment would go towards capacity to produce the first new iPhone model in India. Foxconn did not respond to a request for comment on the report or which of its expansion plans the investment was linked to.
But some industry observers have expressed scepticism that Apple and its main supplier will be able to scale up in India, in part because of challenges around worker housing and securing jobs for women.
“A critical condition for managing the scale-up in India is providing enough housing for workers,” said a person familiar with Foxconn’s plans.
Executives at Foxconn and other Taiwanese contract manufacturers have repeatedly said it would be impossible to replicate the mass-production structures they have built in China in India or Vietnam, mainly because workers there are far less willing to leave their families and live in dormitories.
“In general, people in India expect to commute to work from home and go home at the end of their shift and have dinner with their family,” said an executive at Pegatron, another iPhone supplier. “This limits the size of a single factory to a few tens of thousands.”
