Tuesday, August 4, 2015

Electronics manufacturing in India finally would become a reality

Though many players wanted to do it – large scale electronics manufacturing in India, they could not make progress. Now I have no doubt of it becoming a reality after reading this news piece - Adani to announce JV worth $5 billion with iPhone maker Foxconn (Link: http://economictimes.indiatimes.com/articleshow/48343913.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst)

Adani has money and the Govt. connections. Foxconn being a contract manufacturer for Apple’s products has the technical know-how and access to market. A domestic market already exists in India. Now all pieces come together.

Read into the news, you will know that India is the target market for half of their intended production, while the rest would be exported to Middle-east, Africa and Russia. It makes perfect business sense and India would earn foreign exchange on the planned export of those 200 million phones (when it becomes a reality). Some of the money we spend on oil, which goes to Middle-east comes back to India, not just through remittances but as wage earnings for those cell phones being made in India.

A Foxconn factory in Shenzhen, China
The joint-venture intends to invest $5B through two plants – one to be based in Karnataka and another in Gujarat. Real estate investors – this is time to build insider connections and go hit the market. It would pay-off nicely in the times to come.

While the new investments create jobs here, this has potential to improve the macro economy of India. After oil and gold, it is electronics which is a big item in our imports list. All our hundred crore+ people cannot to do without phones. They will replace it every few years too. And many of them have expensive smartphones in their pockets. So when the new factory starts producing those phones, it would reduce our import bills. And they are planning to sell outside too – that increases exports. Reducing imports and increasing exports at the same time can turn India from a trade deficit country into a trade surplus country. Phew! When more details are available, I would run the numbers and share it with you.


This would take few years to become a reality. But the future looks more certain.