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What just happened? India wants to become the next big manufacturing hub of the world and provide companies like Apple the perfect environment to move the bulk of their production from China. So much so, that local administrations are promoting a significant liberalization of their labor laws.
The Indian state of Karnataka is trying to become the new base for iPhone manufacturing outside China, easing its labor laws to embrace the specific needs of Apple and Foxconn. According to three unnamed people familiar with the matter, Cupertino and the Taiwanese giant were the main drivers behind the labor law liberalization which was passed in Karnataka last month.
The new legislation allows manufacturing companies to have two 12-hour shifts, a consolidated practice in China but a first for India where the previous shift limit was nine hours. The new law also removes some limitations on night-time work for women, who have a dominant presence in production lines located in China, Taiwan, and Vietnam.
According to the amended labor laws, workers in Karnataka can now have a maximum of 48 working hours per week, and allowable overtime went up from 75 to 145 hours over a three-month period. An unnamed official from Karnataka said the local administration was provided "a lot of inputs" from Indian industry lobby groups and foreign companies, even though both Apple and Foxconn have declined to comment.
A source "close" to Foxconn said the new adjustments to India's labor laws are "crucial" for building efficient manufacturing at scale. Foxconn can no longer ignore India's ambitions to become the new manufacturing hub for the largest companies in the world, and being able to run daily production with two 12-hour shifts is seemingly a big step to bring the Indian job market "closer to where we need to be."
The government led by Prime Minister Narendra Modi is trying to turn India's service-heavy economy into a manufacturing powerhouse, just in time for his country to become the most populous nation in the world. Karnataka is located in the southwestern region of India, providing the fifth-largest economy in gross domestic production (GDP) and per capita GDP.
Both New Delhi and local states are providing incentives to Foxconn and other major corporations to host their new manufacturing plants. Foxconn is currently assembling new iPhones in Tamil Nadu state, and the company has already expressed interest in expanding its manufacturing operations in the neighboring states of Karnataka and Telangana. No actual details have been defined for the expansion yet, even though India's IT minister (Rajeev Chandrasekhar) recently said that Apple would produce its iPhones at a new 300-acre factory in Karnataka.