Foxconn to Receive ₹6,970 Crore Incentive for iPhone Manufacturing Plant in Bengaluru

Taiwanese contract manufacturer Foxconn, also known as Hon Hai Precision Industry Co Ltd, is set to receive an incentive of Rs 6,970 crore under Karnataka’s Electronics System Design and Manufacturing (ESDM) policy. The announcement was made by Chief Minister Siddaramaiah during his Budget speech.

Foxconn's Mobile Manufacturing Unit

Foxconn has established a mobile phone manufacturing facility in the Devanahalli Industrial Area with a capital investment of Rs 21,911 crore. This plant will focus on assembling iPhones and is expected to significantly boost the electronics manufacturing ecosystem in Karnataka.

Key Features of the Foxconn Plant

The facility, spread over 300 acres in Doddagollahalli and Chapparadahalli villages in Devanahalli taluk, aims to manufacture 20 million smartphones annually. This plant is in addition to Foxconn’s upcoming unit in Hyderabad and its operational facilities in Sriperumbudur, near Chennai, and Sri City in Andhra Pradesh.

Karnataka’s ESDM Policy and Incentives

The Karnataka government has an ESDM policy that offers a production-linked incentive (PLI) of 1% of annual turnover for five years from the first year of commercial operation. Foxconn is the first major electronics manufacturer to receive such a large incentive, reinforcing Karnataka’s position as a high-end electronics manufacturing hub.

LEAP Initiative to Boost Startups

The Chief Minister also announced a new initiative called the Local Economy Accelerator Program (LEAP), with an initial allocation of Rs 200 crore as part of a larger Rs 1,000 crore grant. LEAP aims to foster innovation and entrepreneurship in cities beyond Bengaluru, such as Mysuru, Mangaluru, Hubballi-Dharwad, and Kalaburagi, creating an estimated five lakh jobs.

Startup Ecosystem and Infrastructure Development

LEAP includes a Rs 300 crore fund-of-funds and a Rs 100 crore corpus for deep-tech development. Additionally, a modern printed circuit board (PCB) park will be developed over 150 acres in Mysuru, the Chief Minister’s home district.

Upcoming IT Policy and Industrial Growth

The government is formulating a new information technology policy focusing on cloud computing, emerging technologies, and IT expansion into tier-2 and tier-3 cities. Furthermore, Rs 48 crore has been allocated for the second phase of the Quantum Research Park in collaboration with the Indian Institute of Science (IISc), Bangalore.

Japanese Industrial Park in Tumakuru

A Japanese Industrial Park is also being developed at the Tumakuru industrial node under the Chennai-Bengaluru Industrial Corridor. Karnataka plans to showcase this investment opportunity at the upcoming World Expo in Osaka, Japan.

Employment Laws and Compliance Digitization

The government will introduce the Karnataka Employer’s Trust Bill and Compliance Digitization Bills to streamline compliance regulations and decriminalize minor violations by employers. This initiative is the first of its kind in India.

Expert Opinions on the Budget

Venture capitalist Prashanth Prakash praised the budget, stating that the Rs 1,000 crore allocation for startup accelerators would help extend Karnataka’s leadership in Global Capability Centers (GCCs) beyond Bengaluru to tier-2 cities. He emphasized that this initiative provides a model for other states to decongest major cities and empower entrepreneurs in their hometowns.

Infrastructure Investment in Bengaluru

The Karnataka government has significantly increased its budgetary allocation for Bengaluru’s infrastructure from Rs 3,000 crore to Rs 7,000 crore. Additionally, Rs 8,916 crore has been earmarked for the construction of a 40.5-km double-decker flyover as part of the Namma Metro Phase 3 Project to tackle the city’s traffic congestion.

Karnataka’s Revenue and Fiscal Outlook

For the fiscal year 2025-26, the state government projects tax revenue of Rs 2,08,100 crore, an increase from Rs 1,80,368 crore in the current fiscal. However, the revenue deficit for the coming year is estimated to be Rs 19,262 crore.

New Investments in Karnataka’s Electronics Sector

• Lam Research Corp: The California-based semiconductor firm has committed to investing in a facility near Bengaluru’s international airport and will be eligible for PLI benefits.

• Silectric Semiconductor: Backed by Zoho, this company is setting up Karnataka’s first semiconductor project with an investment of Rs 3,426 crore near Mysuru.

• Tata Electronics: The company has taken over Wistron’s iPhone assembly facility in Narasapura, Kolar, and is expanding its operations.

Conclusion

Foxconn’s significant investment in Karnataka marks a major milestone in India’s push to become a global electronics manufacturing hub. The incentives provided by the state government, combined with policy initiatives like LEAP, IT policy advancements, and infrastructure development, are set to position Karnataka as a leader in high-tech industries. As these projects unfold, the state is poised to witness substantial economic growth, job creation, and enhanced global competitiveness in electronics and IT sectors.