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However, the research issued a warning that India’s path to becoming a significant manufacturing power would be a long one due to “strong competition from comparable emerging nations, especially in Southeast Asia. For investors, the issues of excessive red tape and protectionist sentiments will persist.

The EIU’s BER scores for India demonstrate that doing business there is getting progressively simpler.

India’s improved performance was attributed by the research and analysis division of the Economist Group to “gains in its scores for foreign trade and exchange controls, infrastructure and technological readiness.”

The country’s political climate received the lowest score, while market prospects received the highest, helped by the enormous and expanding domestic market that India offers.

As evidence of this development, Foxconn, an Apple contractor from Taiwan, was reportedly planning to increase manufacturing in India in March of this year, according to Bloomberg. The manufacturer of the iPhone intends to spend USD 700 million to construct a facility close to Bengaluru, which could greatly increase Apple’s smartphone output in India.

In addition, it stated that Indian authorities claimed Apple wanted to move 25% of its manufacturing there due to worries about China. Currently, India produces between 5 and 7 percent of the overall amount of Apple’s component manufacturing production.

On a 300-acre site not far from Bengaluru, a major IT center, a manufacturing facility is being developed to produce iPhone components and possibly even complete smartphones. It will probably have 100,000 employees, making it around one-third the size of the largest iPhone factory in the world, which is located in the Chinese city of Zhengzhou.

The proposed factory near Bengaluru, according to the Bloomberg report, could “boost the country’s share of iPhone assembly to 10-15% from a sub-5% currently.”

According to Forbes, JP Morgan predicted this year that Apple would shift 5% of worldwide iPhone 14 production to India by the end of 2022, and that percentage would climb to 25% by 2025.

It is unknown if the massive electronics manufacturing facility that Foxconn had earlier this year announced plans to erect in the state of Telangana will produce Apple products. The facility would also generate 100,000 jobs.

The majority of Foxconn’s plants, the largest iPhone manufacturer in the world to date, are currently located in mainland China.

Global geopolitical forces, particularly the hostility between Beijing and Washington, are to blame for the migration to India. The COVID-19 outbreak and the conflict in Russia and Ukraine have also caused international corporations to reassess their manufacturing supply chains and outsourcing possibilities. Some people are thinking about “reshoring sourcing” and “localizing manufacturing” techniques.

Since China has become the world’s factory, many businesses are worried of their supply chains being overly dependent on it. As a result, many are implementing or exploring “China plus one” plans meant to spread manufacturing across several regions.

In order to reduce its dependency on Chinese facilities, Apple is reportedly planning to increase its manufacturing in India. The alleged investments made by Foxconn in India are probably an effort to match Apple’s objectives.

Beijing’s strict anti-Covid lockdowns last year, including one that led to protests at Foxconn’s Zhengzhou facility known as “iPhone City,” where Apple produces nearly all of its iPhone 14 Pro and Pro Plus models, also impacted Apple’s operations in China. Due to this disruption, Apple’s manufacturing goal for the iPhone 14 in 2022 was approximately 6 million units short.

Apple is not the only significant international brand making a bet on India.

Samsung, a leading manufacturer of electronics in Korea, declared in March that it will invest in establishing smart manufacturing capabilities at its mobile phone facility in Noida to increase production’s competitiveness.

Having established a manufacturing R-D facility in India in 1996, Samsung presently employs around 70,000 people there. The second-largest manufacturing plant in the world is located in Noida, and the largest R&D facility, with close to 3,500 employees, is located in Bengaluru. At its R-D facilities across India, it employs 10,000 people.

India is predicted by Samsung to have one billion smartphone users by 2026, and with 600 million people in the 18–35 age range, it has the highest Millennial and GenZ population in the world.

India’s allure to investors is based on its robust and stable economy, substantially expanding incentive programs, improved infrastructure, and availability of a big labor pool. Additionally, policy changes have made it simpler to conduct business in India.

According to the EIU’s researchers, significant advancements in fields like education, a higher labor participation rate, infrastructure, taxation, and trade regulation will further encourage investment.

“India’s increasing viability as a destination for manufacturing investment is clear,” the EIU report’s conclusion read. The business environment is gradually improving due to proactive government incentives for manufacturing, steadily expanding infrastructure, the availability of low-cost labor, and bilateral trade agreements. Investors would be encouraged to consider India due to broader geopolitical issues as well as the need to find alternatives to China.

The nation has a fantastic potential to boost its manufacturing sector, which only contributes to less than 20% of its GDP, in order to promote exports and economic growth.

India would, however, face fierce competition in luring investment from Southeast Asian nations, it was said.

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