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Apple is targeting labor reform in India to diversify beyond China

(Bloomberg) — Apple Inc. is seeking changes in India’s labor laws as part of its effort to expand local manufacturing, and regional governments are complying as they seek to steal iPhone assembly from China.

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India’s southern state of Tamil Nadu, where Apple’s top supplier Foxconn Technology Group operates the country’s largest iPhone plant, is considering enacting new rules that will make factory shifts more flexible, people familiar with the matter said.

Executives from Apple and the Indian Cellular and Electronics Association lobby group — who said the US company, as well as its suppliers like Foxconn, Pegatron Corp, asked not to be named because the discussions were private. The planned changes would bring local working hours to the level of iPhone factories in China, they said.

The moves are part of Apple’s effort to shift more manufacturing from China to countries like India. Prime Minister Narendra Modi’s local manufacturing push, financial stimulus and India’s relatively cheaper labor force have prompted Foxconn, Pegatron and Wistron to ramp up in the South Asian nation.

Representatives from Apple, Foxconn and the Tamil Nadu government did not immediately respond to requests for comment. Pegatron and Wistron officials declined to comment.

“India wants global brands like Apple to make the country a home for manufacturing, research and development,” India’s Deputy Technology Minister Rajeev Chandrasekhar told Bloomberg News. “The federal government is working closely with the states to develop competitive strategies such as labor, logistics and infrastructure that will help accelerate the electronics supply chain shift to India.”

Labor law reforms in India are rare, and the country’s willingness to accommodate Apple now underscores just how badly it wants to become an electronics manufacturing hub. Proposed changes include allowing more overtime and allowing factories to work two 12-hour shifts instead of the previous three eight-hour shifts.

The proposed changes could also encourage more women to work in factories. More flexible shifts could allow women to avoid commuting on night buses — often seen as an unsafe option. Apple and its suppliers are also in talks to build large dormitories for working women in and around factory complexes, which would reduce travel time, two of the people said.

Foxconn, Pegatron and Wistron together employ almost 60,000 people in India. A significant portion of that number are women between the ages of 19 and 24.

“In electronics manufacturing, women fit naturally thanks to the hygienic environment and roles in the units,” ICEA said in the 36-page recommendation document it submitted to the Tamil Nadu government, available to Bloomberg News. “Women have excellent manual dexterity, which is required for high-precision electronics assembly.”

The state of Karnataka, home to Wistron’s iPhone plant and where Foxconn plans to build a new $700 million facility, has passed legislation in recent weeks allowing changes to labor regulations. The Financial Times previously reported on Apple’s lobbying work in the state.

Other Indian states like Andhra Pradesh, Gujarat and Uttar Pradesh, home to Samsung Electronics Co.’s smartphone factory, may also follow Karnataka and Tamil Nadu, two of the people told Bloomberg News.

–Assisted by Debby Wu and Atul Prakash.

(Updates with Indian Minister’s comment in sixth paragraph)

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