After Saying MoU Not Definitive, Foxconn Says Committed To Taking Bengaluru Project Forward

SUMMARY

In a letter to Karnataka CM Bommai, the Foxconn chief said that he will ensure ‘successful grounding of Project Elephant’ that is planned on the outskirts of Bengaluru city

A political row erupted in the state earlier after Foxconn said that the agreement to set up the manufacturing unit in the state was not definitive

Meanwhile, in a separate letter written to Telangana CM K Chandrasekhar Rao, Foxconn Chairman also said that the company was committed to setting up a plant in the state

Confusion continues to prevail over Foxconn’s plans to set up a factory in Bengaluru. After publicly signing an agreement with the Karnataka government and then saying that the deal was not ‘definitive’ in nature, the Taiwanese major has now said that it is committed to taking the project forward.

In a letter to Karnataka Chief Minister Basavaraj Bommai, Foxconn Chairman Young Liu reportedly said that the company will be in close touch with the state government to take the electronics manufacturing project forward.

Assuaging concerns,Liu said that he will ensure ‘successful grounding of the Project Elephant’ that is planned on the outskirts of Bengaluru city.

“I am confident that this project will lay a strong foundation for our other multiple plans, spanning mechanical/precision machinery, electric vehicle, IC Design & semiconductor segments to consider your State as a potential investment destination,” Liu was quoted as saying by The Economic Times.

This is in line with multiple previous reports which said that Foxconn was looking to set up a 300-acre Apple iPhone manufacturing facility that would generate 1 Lakh direct and indirect jobs over the next 10 years. It has also been reported that Foxconn would also deploy the plant to produce some parts for its nascent electric vehicle business, besides assembling iPhones.

Liu also lauded Karnataka’s infrastructure readiness timelines and the government’s support for skilling and talent acquisition as part of the project.

This comes close on the heels of Liu writing a separate letter to Telangana Chief Minister K. Chandrasekhar Rao and saying that Foxconn was committed to setting up a plant in the state.

“As discussed with you during our meeting on March 2, Foxconn is committed to setting up a manufacturing facility in Kongara Kalan and I seek the support of your team in operationalising the Kongara Kalan Park as early as possible,” read Liu’s letter to Rao.

With both southern states wooing the Foxconn boss, Liu is also said to have invited CM Rao to visit Taiwan as his personal guest. It is pertinent to note that Foxconn already operates a facility in Telangana.

However, it could not be verified if the manufacturing facility referred to in the letter to Rao is different from the one the company plans to set up in Karnataka.

Political Row In Karnataka

The flip-flops by Foxconn led to the eruption of a political row in Karnataka. After reports emerged last week that the contract manufacturing giant was looking to invest between $700 Mn and $1 Bn in Karnataka, the company publicly signed a Memorandum of Understanding (MoU) with the government.

Subsequently, Foxconn said that the agreement was not definitive in nature, which invited sharp criticism from Congress and other opposition parties who dubbed the agreement a ‘publicity stunt’ and ‘an exercise in fakery’.

Reacting to the reports, Karnataka’s industries department on Sunday (March 5) released a letter of intent (LoI) signed between the two sides for the manufacturing project. The LoI showed that 300 acres of land has been earmarked for the company in Doddaballapur and Devanahalli taluks on the outskirts of Bengaluru.

Afterwards, it also emerged that Liu, who also visited Hyderabad on March 2, had signed an MoU with the Telangana government. The local authorities are said to have offered Foxconn 200 acres of land to set up a facility in the Kongara Kalan area, nearly 35 kms from Hyderabad.

The two states have been looking to woo the contract major to their respective states to spruce up the local electronics manufacturing ecosystem and to create more jobs. The tug of war also comes as both states prepare for state elections later this year.

On the other hand, Foxconn’s move to set up a base outside China is likely guided by concerns over geopolitical sabre-rattling between Beijing and Washington DC. The company has also ramped up its plans to diversify its iPhone production outside China owing to the supply chain disruptions due to strict lockdown measures in the country earlier.

The Taiwanese electronics manufacturer also diverted $500 Mn worth of funds to its Indian subsidiary in December last year.

India has emerged as an attractive destination owing to its production linked incentive (PLI) scheme which has led to a host of Apple vendors making a beeline for India. While Jabil Inc, another key vendor of Apple, recently began manufacturing AirPods components in India, Salcomp announced plans to double its workforce in India to 25,000 by 2026.

This has led to a spurt in iPhones manufactured in the country. Apple exported iPhones worth INR 30,000 Cr from India between April and December last year.