View: Foxconn’s change of heart on chips is a warning to India

economictimes.indiatimes.com:

electronics manufacturing hub. Given that level of ambition, we need to be prepared for setbacks — such as the news this week that Taiwan-based Foxconn would not, in the end, build a semiconductor factory in the western Indian state of Gujarat. This was a huge disappointment.

Getting some semiconductor fabrication to happen onshore was a crucial part of India’s plans to create a homegrown, end-to-end electronics manufacturing supply chain. Those plans, it turns out, may have been both too ambitious and not ambitious enough. They are not grand enough because, even if the government’s targets for export growth are met, we will still be some distance behind smaller countries such as Vietnam.

A recent study by India’s handset makers pointed out that Vietnam’s mobile phone-related exports were more than nine times India’s in 2021; even Thailand exported nearly four times as much. And they are overly ambitious because meeting even current targets would require electronics exports to grow between 65% and 75% a year. This is, of course, far quicker than they’ve ever expanded before.

Even if India’s mobile-related exports grow consistently as fast as they did in the previous record year of 2015, the manufacturers point out, it will take us the better part of this decade just to reach the level that Vietnam is at now. How can India both raise and meet its ambitions? For manufacturers, the answer is clear: by opening up to trade and offering a more stable policy environment. Every country in the emerging world, including India, has “focused on attracting investment through subsidies, facilitating trade, and improving operational conditions for investors and domestic producers,” the report says.