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Foxconn plans to invest up to $1 billion to expand a factory in southern India where the Taiwanese contract manufacturer assembles Apple iPhones, two sources said. The move, the scale of which has not previously been reported, is part of a quiet and gradual production shift by Apple away from China as it navigates disruptions from a trade war between Beijing and Washington and the coronavirus crisis.

The investment is said to take place over three years and will also add about 6,000 jobs at the Sriperumbur plant in Tamil Nadu state, which at present manufactures iPhone models in India. The plant manufactures the iPhone XR, Apple’s cheaper flagship-class iPhone. The older version of the iPhone SE and some other models that have been discontinued by the company globally were also manufactured in Sriperumbur plant. 

The upcoming investment is said to be in line with the new production-linked incentive (PLI) scheme by the Indian government. The PLI for Large Scale Electronics Manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components including Assembly, Testing, Marking and Packaging (ATMP) units.

"With India's labour cheaper compared with China, and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub," Neil Shah of Hong Kong-based tech researcher Counterpoint said.

India is also working to boost electronics manufacturing by firms such as Foxconn and last month launched a $6.65 billion plan, offering five global smartphone makers incentives to establish or expand domestic production.

Having Apple widen its local presence is likely to be a boost for Prime Minister Narendra Modi's flagship "Make In India" drive, aimed at creating new jobs.

All signs are now pointing to Apple being one of the five smartphone manufacturers that India is going all out to win over to make their economic cause a reality.

South Korea's Samsung has already said it will make smartphones for export from its plant outside New Delhi.