Can Modi's plan be realized? Apple and Tesla are looking towards India | giants | plans

Last week, Indian Prime Minister Modi visited the United States and held meetings with executives from American technology giants including Apple, Google, and Microsoft at the White House. Modi also met separately with Tesla CEO Musk.

The Modi government is increasing its efforts to attract foreign investment, especially from technology companies, in India. As the country with the world's largest population, the Indian market presents enormous market opportunities for companies like Apple and Tesla, but still faces challenges in infrastructure construction and talent attraction.

Modi meets with the "giant" and gains a lot

India is seeking investment from technology giants to support its startups, create employment opportunities, promote exports, promote digitalization, and empower individuals and small and medium-sized enterprises to participate in global competition.

During Modi's visit, Amazon announced that it will increase its investment in India in the coming years. After meeting with Modi, CEO Andy Jassy stated that Amazon's investment in India will reach $26 billion by 2030, an increase of $6.5 billion from the original plan. Last month, Amazon's cloud computing division AWS also announced that it will invest approximately $13 billion in the country by the end of 2030.

Google has already established a $10 billion India Digital Fund and will continue to promote specific investments. The company will also open a global fintech operations center in Gujarat, western India, to support the operation of Google Pay's payment service GPay and other Google product operations.

Google is also optimistic about the huge potential of the artificial intelligence market in India, stating that it will strengthen cooperation with the Indian Institute of Science in the open source of artificial intelligence model voice data. OpenAI CEO Ultraman also discussed opportunities for collaboration in artificial intelligence during a meeting with Modi.

India is still a very small market for Apple at present. But India's population has surpassed China to become the world's most populous country, which also means huge consumer market potential.

Apple CEO Cook said after meeting with Modi that India represents a "huge opportunity". Apple opened two retail stores in India earlier this year. The latest news is that Apple is in close contact with Indian officials in recent weeks and plans to launch Apple Pay, an Apple payment service, in the Indian market. At present, the electronic payment field in India is mainly dominated by PhonePe of Wal Mart, GPay of Google and Paytm of the local.

After meeting with Modi last week, Musk stated that Modi is pushing Tesla to make a "major investment" and added that he expects to announce this news soon. "India has enormous potential for a sustainable energy future, including solar energy, batteries, and electric vehicles," he said. "I believe Tesla will enter India and will do so as soon as possible." Last month, Musk stated that Tesla may choose the location of a new factory by the end of this year, adding that India is a possible option.

Musk also said that he hoped to introduce SpaceX's Starlink satellite Internet service to India. Subsequently, a spokesperson for the Indian Ministry of Foreign Affairs tweeted that Modi had invited Musk to "explore opportunities for investing in electric vehicles and rapidly expanding commercial aerospace in India.". India paved the way for private space launches in 2020 and hopes to increase its share in the global private space launch market fivefold within the next decade.

Major semiconductor companies such as Micron and Applied Materials also took Modi's visit as an opportunity to announce plans for significant investments in India. Semiconductor company Colin R&D has announced plans to train 60000 Indian engineers.

Some companies are starting to recruit on a large scale

When discussing the Indian market during Modi's visit to the United States, Masalek, CEO of American technology and communication company Asia, said, "One fifth of our 6000 employees worldwide are in India. The Modi government is vigorously promoting India's digital transformation, which also provides opportunities for Avaya's development in India."

Recruiting highly skilled labor in India is a challenge faced by technology companies. When it comes to talent recruitment, Masalek said that in the coming years, Avaya will increase the number of employees in India by about 20%.

"India has the largest population in the world, especially among young people who have a lot of talent, especially in IT technology innovation. We have talent centers in places like Hyderabad and Bangalore." He said, "Many multinational companies, whether they are basic employees, middle managers or executives, have a large number of Indian high-tech talents."

Avaya's Global Vice President and Asia Pacific President, Fu Lili, told First Financial reporters that compared to the Chinese labor market, India's labor cost advantage is very obvious. "Especially for middle and senior level employees, the cost of Indian employees is almost half lower than that of Chinese employees, which is related to factors such as living costs." She also revealed that due to cost considerations, Avaya tends to recruit employees in India to support global business departments.

In fact, not only American technology companies, but also global technology companies are looking at the Indian market. "We have just established a research and development center in Hyderabad, India, and are currently recruiting talent on a large scale," said Tian Xiaopeng, Global Vice President and General Manager of Greater China and North Asia at Australian AI data service company Aopeng, to a reporter from First Financial

In Tian Xiaopeng's view, India has sufficient resources in technology/business process outsourcing and other technology research and development fields, and there are a large number of data annotation and service companies and teams in the local area; India also has significant cost advantages; English is also an advantage of India's human resources.

"Especially for AI data companies like us, they will benefit from the investments of giants such as Google and Amazon in India. From the perspective of talent and industry ecology, there are great market opportunities," Tian Xiaopeng told reporters from First Financial.

The market views technology companies' investment in India as a "China+1" strategy for enterprises. Will multinational corporations increase their investment in India while weakening the importance of the Chinese market to them?

Both Fu Lili and Tian Xiaopeng believe that this is not a choice between the two. "We also attach great importance to the Chinese market and have made significant investments in China, with both India and China being important," Fuli Li told First Financial reporters.

Tian Xiaopeng believes that the global AI market is huge, and both China and India are nurturing huge opportunities.

Part of the reason why the Indian market has long struggled to attract foreign investment is due to high tariffs in India, and the prices of certain components are higher than the global market average. Moreover, India also faces competition from neighboring Southeast Asian markets, such as Vietnam, which is ahead of India in terms of business convenience, talent skills, and infrastructure.

Fuli Li, who is responsible for Avaya's entire Asia Pacific business, has a deeper experience and comparison in different markets. "Although Vietnam and other countries may outperform India in terms of worker skills, India's basic education is more solid, especially in terms of high-end technical talents," she said.

From Made in India to Designed in India

Research firm Canalys analyst Liu Jiansen has just inspected the Indian technology market. He told a reporter from First Financial News, "We have noticed that many early startups are investing in India and they are optimistic about India's maturing technology ecosystem, especially in areas such as electric vehicles, AI, the Internet of Things, and cloud computing, where investment is more active."

Foxconn, Apple's main supplier, has announced significant investments in India, with approximately 70% of iPhones globally assembled directly by Foxconn. Last month, the IT Minister of the Indian state of Trengana announced that Foxconn had broken ground to build a new $500 million factory in the state.

According to a tweet from the government of Trengana, the first phase of the new Trengana factory will employ 25000 workers. Foxconn was previously revealed to be planning to build another factory in the Indian state of Karnataka on the outskirts of Bangalore.

In recent years, India has been paying more attention to the IT services industry, but with the influx of manufacturing giants such as Foxconn, India is increasingly hoping to build a "manufacturing powerhouse".

Neil Shah, an analyst at research firm Counterpoint Research, said that Apple hopes that within the next 3-4 years, 20% to 25% of the world's iPhones will be produced in India. As of the end of 2022, this number was only 6%. "Apple has been pushing partners such as Foxconn to increase production in India," he said.

"India's vast consumer market, favorable population structure, and government initiatives such as the 'Made in India' strategy have attracted many technology companies to invest in manufacturing facilities in the country. India's strategic importance to these participants in the future may depend on sustained infrastructure development, business convenience, government incentives, and the ability to address challenges in logistics, supply chain efficiency, talent pool skill enhancement, and talent retention," wrote Dipak Jahn, a partner at Bain

Jahn stated that India is expected to become a significant electric vehicle market driven by strong domestic demand, favorable regulatory environment, and manufacturers. By 2030, the opportunity for the entire electric vehicle value chain in India will exceed $100 billion. "Combined with a strong talent base and a well-established automotive manufacturing industry, India has enormous potential to become a center for electric vehicle manufacturing," he said.

At the same time, India's ability in industrial design needs to be improved. Indian VLSI Association President Gupta stated that Apple's dependence on China is not only due to manufacturing, but also because China has made significant contributions to the design of iPhone products.

Gupta stated that India has a large number of engineering talents, but has not utilized these talents for product design. He said that in order to create a sustainable electronic manufacturing ecosystem, in addition to manufacturing, product design is also a key aspect that should be given appropriate attention and incentives.

"Manufacturing alone is not a sticky business, as people can theoretically go anywhere with incentives, labor, and market needs." Gupta said, "And once you anchor manufacturing around product design, you create a more sustainable and sticky business. I think for Apple, product design dependency is more important, and basically, Apple's supply chain can establish itself in China, not just relying on pure manufacturing."

Lily agrees with this viewpoint. She believes that China's entire industrial chain from design to manufacturing is its greatest advantage. "Of course, we can still do better in talent cultivation, especially by increasing efforts to strengthen basic education training for young people, cultivating talents with innovative thinking, international perspectives, and global competitiveness. At the same time, the government should also strive to create a more friendly and innovative business environment." She told a reporter from First Financial News.