India is quietly grabbing more manufacturing of Apple’s iPhones and other electronics from China.
It occurs in industrial areas of South India on muddy land that was once agricultural land.
In Sriperumbudur, people call Apple ‘the customer’, not daring to name a company that prizes its secrets.
But some things are too big to hide. Two giant dormitory complexes rise from the earth. Once finished, each will be a tight block of 13 buildings with 24 rooms per floor around an L-shaped corridor. Each of these pink-painted rooms will have beds for six workers, all women. The two blocks will house 18,720 workers each.
It’s a ready-made scene from Shenzhen or Zhengzhou, the Chinese cities famous for their iPhone manufacturing prowess. And it’s no wonder.
Sriperumbudur, in the state of Tamil Nadu, is home to the expanding Indian stronghold of Foxconn, the Taiwan-based company that has long played a major role in iPhone production. And as recently as 2019, about 99 percent of them were made in China.
India, as part of a national manufacturing effort, is removing this dominance when many companies want to spread their work to countries other than China. An estimated 13 percent of the world’s iPhones were assembled in India last year, and about three-quarters of them were made in Tamil Nadu. By next year, the volume produced in India is expected to double.
But despite nearly 10 years of a “Make in India” initiative promoted by the country’s powerful Prime Minister Narendra Modi, manufacturing as a share of the economy has stalled. At around 16 per cent, it is a shade lower than when Mr Modi took office in 2014 and far below that of China or Japan, Taiwan and South Korea when these Asian tigers took off.
India desperately needs more skilled jobs and factory work is creating them like nothing else. Last year, India overtook China to become the world’s most populous country, and its working-age population is growing rapidly. But turning this demographic bulge into a real asset means making India’s workers more productive. Half of them still depend on small-scale agriculture.
Tamil Nadu can show the way forward. The state of 72 million people is now succeeding in ways that have eluded India as a whole. The national government began subsidizing electronics manufacturing across the country in 2021, sparking a gold rush in places like Noida, next to New Delhi.
But for Tamil Nadu, this incentive is no real lure. TRB Rajaa, Tamil Nadu’s Industries Minister, can breach the state’s built-in strengths: schools, transport, engineering graduates.
“We never compare our development with other Indian states,” he said. “We write off the development of the Nordic countries and how we can beat it.”
Mr. Rajaa and other Tamil Nadu boosters are proud of the human capital their state has built, especially its women. Many of them work in formal jobs, while few women in other states do: 43 percent of all Indian factory workers work in Tamil Nadu, which is home to 5 percent of the national population.
Parts of Tamil Nadu are already working as industrial champions. A long belt of car and parts manufacturers stretches up the coast from its capital, Chennai. In the west valley of Coimbatore, factories specialize in die casting and pump making. There is a cluster of knitters at Tiruppur and the country’s largest match maker is at Sivakasi.
It is impressive that India is drowning in premium products like the iPhone. India never became internationally competitive in making things like T-shirts or sneakers, as its watch is cleaned by smaller and formerly less developed countries like Bangladesh and Vietnam.
It is not the first time this century that India has been expected to rise to the ranks of high-value electronics manufacturing. Not the first time Tamil Nadu seemed like the best starting point for it. In 2006, Finland’s Nokia, then a mobile phone giant, built a large factory in the center of the government-planned Sriperubudur industrial area. It was supposed to make millions of phones a year, for India and the rest of the world. The smartphone and the global financial crisis in 2009 shattered those dreams.
But the roots never died. Sriperumbudur was initially attracted because of its experience in car manufacturing. Hyundai had set up shop in 1996, soon after India’s economy opened up to more foreign investment and Tamil Nadu formed its first state development agency. This was followed by glassmaking and basic electrical items. After a lull, the old Nokia site was built by Salcomp, a local company that makes high-tech power chargers, now for companies like Apple. The factories of a dozen other well-known and rumored Apple suppliers have sprouted up around it, along with Samsung, Dell and most of the big multinational electronics companies.
On Friday, India’s Republic Day, Young Liu, Foxconn’s chief executive, was in New Delhi to be awarded the Padma Bhushan, the country’s third-highest civilian honour. “Let’s do our part,” he said, “for manufacturing in India and for the betterment of society.”
A thriving network of small, medium and large enterprises contributes to the success of Tamil Nadu. One of them is Sancraft Industries in Sriperumbudur, a company with about $5 million in revenue that makes molded plastic parts for a handful of companies that power the iPhone machine.
A company founder, Amit Gupta, said that Nokia “brought the ecosystem here” and that its Finnish engineers had done a lot to introduce global standards. His experience working with an early client, Schneider Electric, a French company, taught him how to integrate his operations with more recent arrivals from South Korea, Taiwan and China.
As host to an international supply chain, Tamil Nadu has attracted restaurants and grocers catering to West and East Asian tastes. “It’s like a small version of China here,” said Mr. Gupta, who worked in Shenzhen 15 years ago.
In India and abroad, there is no shortage of excitement about the prospect of India replacing China in at least one part of global supply chains. Until last year, Tim Cook, Apple’s chief executive, appeared in India with his palms pressed in namaste and a yellow mark on his forehead, inaugurating the first Apple stores in the country.
In total, more than 130 Fortune 500 companies operate in Tamil Nadu.
Electronics campuses in Sriperumbur look impressive. Gardens and parking lots filled with dozens of white buses separate low-key assembly plants. Buses carry thousands of workers to and from their homes in villages 30 to 60 miles away.
Inside an Apple supplier, blue-hued workers in surgical masks walked past banks of white aluminum-clad machinery on paths marked by yellow arrows taped to the floor. Low ceilings, long clear vistas and placards exhorting good behavior in English and Tamil completed the effect.
More will follow. Corning, the US glassmaker, is building a factory that could produce Gorilla Glass iPhone screens, and Vietnam’s VinFast Auto announced a $2 billion facility to build electric vehicles.
Mr. Rajaa, the state’s industries minister, is not stopping at $1,000 smartphones either. He and other officials in Tamil Nadu are trying to attract more businesses that make cheaper stuff, too, in larger volumes. If the rest of the country could follow Tamil Nadu, India could produce many of the less skilled jobs needed by its young and growing population.
Mr. Rajaa spent the first week of January rewarding foreign investors with plans that included a budding new industrial cluster focused on non-leather footwear. About 140 miles south of Sriperumbudur, Nikes, Adidases and Crocs are just starting to roll off the lines at Perambalur.
