India is quietly trying to steal more market share from China’s iPhones

India is quietly grabbing more manufacturing of Apple iPhones and other electronic equipment from China.

This happens in industrial areas of southern India, on muddy patches that were once agricultural land.

In Sriperumbudur, people call Apple “the customer,” not daring to utter the name of a company that cherishes its secrets.

But some things are too important to hide. Two gigantic dormitory complexes rise from the ground. When completed, each will form a tight block of 13 buildings with 24 rooms per floor around an L-shaped corridor. Each of these pink-painted rooms will have beds for six workers, all women. The two blocks will each house 18,720 workers.

It’s a ready-made scene from Shenzhen or Zhengzhou, the Chinese cities famous for their iPhone production prowess. And it’s no wonder.

Sriperumbudur in Tamil Nadu state is home to the growing Indian stronghold of Foxconn, the Taiwanese company that has long played the most important role in iPhone production. And as recently as 2019, about 99% of them were made in China.

India, as part of a national manufacturing drive, is chipping away at that dominance, as many companies seek to expand their work to countries beyond China. An estimated 13% of the world’s iPhones were assembled in India last year, and about three-quarters of them were manufactured in Tamil Nadu. By next year, the volume produced in India is expected to double.

But despite nearly 10 years of the “Make in India” initiative promoted by the country’s powerful prime minister, Narendra Modi, manufacturing’s share of the economy has stalled. At around 16 percent, that’s a little less than when Mr. Modi took office in 2014, and much lower than that of China, or Japan, Taiwan and South Korea when those Asian tigers took office. took off.

India desperately needs more skilled jobs, and factory work is creating them like nowhere else. Last year, India overtook China to become the world’s most populous country, and its working-age population is growing rapidly. But turning this population surge into a current advantage means making Indian workers more productive. Half of them still depend on small-scale agriculture.

Tamil Nadu could show the way forward. The state of 72 million people is now succeeding in ways that have eluded India as a whole. The national government began subsidizing electronics manufacturing across the country in 2021, triggering a gold rush in places like Noida, near New Delhi.

But for Tamil Nadu, this incentive is not an essential lure. TRB Rajaa, Tamil Nadu’s industries minister, can tout the state’s intrinsic advantages: schools, transport, engineering graduates.

“We never compare our growth with other Indian states,” he said. “We are adapting to the growth of the Scandinavian countries and how we can beat it.”

Mr. Rajaa and other developers in Tamil Nadu are proud of the human capital their state has built, and especially its women. Many of them hold formal jobs, while few women in other states do: 43 percent of all Indian female factory workers work in Tamil Nadu, which is home to 5 percent of the national population.

Parts of Tamil Nadu are already functioning as industrial champions. A long belt of automakers and auto parts stretches along the coast from its capital, Chennai. In the western valley of Coimbatore, factories specialize in manufacturing die castings and pumps. There is a knitting hub in Tiruppur and the largest match maker in the country is in Sivakasi.

It is striking that India is launching into such high-end products as the iPhone. India never became internationally competitive in manufacturing things like T-shirts or sneakers, having its clock cleaned by smaller and formerly less developed countries like Bangladesh and Vietnam.

This is not the first time in this century that India is expected to climb the manufacturing ladder of high-value electronics products. Nor the first time Tamil Nadu seemed to be the best launching pad for this. In 2006, the Finnish group Nokia, then a colossus in mobile telephony, built a large factory in the center of the government-planned industrial zone of Sriperumbudur. The company was supposed to make millions of phones a year, for India and the rest of the world. The smartphone and the global financial crisis of 2009 crushed those dreams.

But the roots never died. Sriperumbudur was initially attractive because of its background in automobile manufacturing. Hyundai had opened its doors in 1996, soon after India opened its economy to more foreign investment and Tamil Nadu established its first state development agency. Glassware and basic electrical products followed. After a lull, the former Nokia site was rebuilt by Salcomp, a local company that makes high-end chargers, now for companies like Apple. Factories for a dozen other known and rumored Apple suppliers have sprung up around it, along with Samsung, Dell and most other major multinational electronics companies.

On Friday, India’s Republic Day, Young Liu, chief executive of Foxconn, was in New Delhi to receive the Padma Bhushan, the country’s third highest civilian honor. “Let us do our part,” he said, “for manufacturing in India and for the betterment of society.”

A thriving network of small, medium and large businesses contributes to Tamil Nadu’s success. One of them is Sancraft Industries in Sriperumbudur, a company with a turnover of about $5 million that makes molded plastic parts for a handful of companies that power the iPhone machine.

A company founder, Amit Gupta, said Nokia had “brought the ecosystem here” and its Finnish engineers had done a lot to introduce global standards. His experience working with an early client, Schneider Electric, a French company, taught him how to integrate his operations with more recent arrivals from South Korea, Taiwan and China.

As host to an international supply chain, Tamil Nadu has attracted restaurants and grocery stores catering to Western and East Asian tastes. “Here, it’s like a little version of China,” said Mr. Gupta, who worked in Shenzhen 15 years ago.

There is no shortage of excitement in India and abroad about India supplanting China in at least part of global supply chains. Last year, Tim Cook, Apple’s chief executive, showed up in India with namaste-pressed palms and a vermilion mark on his forehead, inaugurating the country’s first Apple stores.

In total, more than 130 Fortune 500 companies are doing business in Tamil Nadu.

The electronics campuses of Sriperumbur look remarkably similar. Gardens and parking lots filled with dozens of white buses separate the low-slung assembly plants. The buses transport thousands of workers to and from their homes in villages 30 to 60 miles away.

At an Apple supplier, workers in blue coats and surgical masks walked past rows of machines covered in white aluminum on paths marked by yellow arrows taped to the floor. Low ceilings, long, unobstructed sight lines and placards exhorting good behavior in English and Tamil completed the effect.

There are more to come. Corning, the American glassmaker, is creating a factory that could produce the iPhone’s Gorilla Glass displays, and Vietnam’s VinFast Auto has announced a $2 billion facility to make electric vehicles.

Mr. Rajaa, the state’s industry minister, isn’t stopping at $1,000 smartphones, either. He and other Tamil Nadu officials are trying to attract more companies that also offer cheaper, higher-volume products. If the rest of the country could follow Tamil Nadu’s lead, India might be able to create enough of the lower-skilled jobs its young and growing population needs.

Mr Rajaa spent the first week of January pitching projects to foreign investors that included a nascent new industrial hub, focused on non-leather footwear. About 220 km south of Sriperumbudur, Nikes, Adidas and Crocs are just starting to roll off the lines in Perambalur.