Foxconn’s India arm is evaluating areas within the Nokia special economic zone (SEZ) in Sriperumbudur, as it looks to expand production capacity which is set to double to at least 30 million by the year-end. The Taiwanese manufacturing giant is however not keen on re-opening its now-closed plant and neither the old Nokia factory.
According to people aware of the company’s plans, the world’s largest contract manufacturer is exploring the area for housing plants for its key clients like Nokia, now owned by HMD Global, and Xiaomi, which are growing rapidly and will require more production capacity in the coming quarters.
“There will have to be more capacity, they are reaching their production peaks in the present lines in Andhra Pradesh,” one of the people aware of the production of the company said, asking not to be named. Foxconn Technology Group declined to comment on queries regarding expansion in India.
Xiaomi, which sold nearly 4 million phones in October, and Nokia which has swiftly risen to No 3 in featurephones within a year of the relaunch, get their phones made from Foxconn in India. Both companies had earlier told ET that they want to ramp up capacity to meet the unending demand of their phones, as both expand their portfolios. Both want that all the phones that they sell here should be made locally, thus production capacity has to increase.
Foxconn makes phones and televisions in India for other brands at four plants in Sri City, Andhra Pradesh, and one near Chennai. The company also makes phones for Oppo, Gionee and its own brand Infocus.
“While the old Nokia factory would be ideal since it’s not far away from the AP plant, they are not keen,” the person added. Besides the unstable political environment of the state due to infighting in AIADMK, the lack of response and interest from the state government to demands that the company had raised to revive the plant have not won them any points. “Things are as they were last year,” the person added. Last year, Foxconn had set conditions including immunity from all legal tangles and financial liabilities to revive the Nokia plant, including conversion of the SEZ where the phone manufacturing factory is situated, or part of it, into a domestic tariff area (DTA), so that phones produced there can be sold within India.
Among the list of demands, Foxconn had sought that the Tamil Nadu government declare the Nokia plant a state utility and handle all labour-related issues. Foxconn had also sought uninterrupted power supply from the state and wanted it to form a special purpose vehicle to provide a skilled workforce without any obligation to employ former Nokia and Foxconn workers. The state should also provide a land subsidy, so that the company can develop a vendor ecosystem, it had said.