Hon Hai Precision, the world’s largest electronics contract manufacturer, plans to invest up to $5 billion in India to expand its production footprint and make the country a second manufacturing hub after China, The Economic Times (ET) reported.

A representative of the Taiwan-headquartered company, better known as Foxconn, told ET it will expand its operations in an “exponential manner”, with its confidence boosted following an Indian government push to implement a goods and services tax (GST) as well as impose import duties on smartphones which will make imports more expensive.

In August 2015, Foxconn announced plans to invest $5 billion in a factory in the state of Maharashtra, in west India, which would employ up to 50,000 people. The company’s chairman, Terry Gou, said at the time it planned to invest heavily in factories and other facilities in India over the next ten years.

Foxconn assembles handsets in India for companies such as Oppo, Xiaomi and Gionee. It has a capacity of 4 million devices per month, which it can increase to at least 10 million units per month after the first phase of the new investment, ET said.

The company representative said part of the investment could be used to set up a display fabrication facility, which would require an investment of about $3 billion.

Second largest
India, one of the fastest growing smartphone markets in the world, is on track to have more than half a billion smartphone users within the next four years, Counterpoint Research predicts. In early 2016 the country surpassed the US to become the second largest global smartphone market in terms of users.

The rising demand and local content requirements have attracted investment in local production.

Samsung confirmed in early June it will invest INR4.9 billion ($760 million) in India to double its production capacity for handsets, a month after Apple began producing iPhones.

Apple reached a deal in mid-February to start assembling lower-priced iPhones in India, with contract manufacturer Wistron to set up a facility in technology hub Bengaluru (Bangalore) to produce only iPhones.

Counterpoint Research estimates three-quarters of smartphones sold in India in 2016 were made locally.