Karnataka or Telangana? Another Foxconn project caught between 2 states, KCR claims win

Chairman, @HonHai_Foxconn Mr. Young Liu, in a letter addressed to CM Sri KCR, has stated that he was inspired by the vision and efforts of the #Telangana CM towards transformation and development of the State. pic.twitter.com/dJ82MinS14

— Telangana CMO (@TelanganaCMO) March 6, 2023

An Industries Department official said: “The personal letter from Young Liu to the CM sets the record straight. There is no more confusion.”

However, till as recently as March 2, the Basavaraj Bommai government in Karnataka had been claiming that Foxconn, which makes cell phones for firms like Apple, was likely to make investment for a manufacturing unit near Bengaluru.

Announcing the same after a meeting with officials of the firm, including Liu, a statement by Bommai’s office said on March 2: “The world’s leading electronic manufacturing company Hon Hai Technology Group (Foxconn) is expected to make a huge investment in the state and around one lakh jobs are likely to be created… An MoU was signed in the presence of Chief Minister Basavaraj Bommai.”

The statement said even land for the project had been identified, around 300 acres in Doddaballapur and Devanahalli near the Bengaluru International Airport. Foxconn officials had visited the site, the government said.

Bommai added that given that the state had “the requisite technical talent” for a global manufacturing firm, Foxconn had also promised to look into investment in the semiconductor sector in the state.

In a tweet, Bommai had thanked “the visionary leadership” of Prime Minister Narendra Modi and said, “Apple phones to be built in the state soon. Apart from creating about 100,000 jobs, it will create a whole lot of opportunities for Karnataka.”

The Karnataka government recently amended the Factories Act, 1948, to allow 12-hour working days, seen as a bid to be competitive in the manufacturing sector like China, South Korea, Vietnam etc.

Days later, to the embarrassment of the Bommai government, Foxconn denied entering into any “definitive agreements”. What had been signed was a letter of intent, officials said, with investment proposals still under discussion. The proposed years of investment is said to be 2023-27.

On Monday, Foxconn issued a statement saying it will be in “close contact” with the Karnataka government to take forward and ensure the “successful grounding” of its manufacturing project near Bengaluru.

“My team will be in close contact with your team to take this forward and ensure successful grounding of ‘Project Elephant’ in Bengaluru. I am confident that this project will lay a strong foundation for our other multiple plans, spanning mechanical / precision machinery, electric vehicle, IC design & semiconductor segments to consider your State as a potential investment destination,” Liu said, appreciating the “infrastructure-readiness timelines” and the government’s support.

Opposition parties tore into the Bommai government after Foxconn’s denial, calling its announcements “publicity stunts”, and advising it to tread carefully when it came to investments in Karnataka.

AICC general secretary Randeep Singh Surjewala accused Bommai of “lying” to the state, called his claims “an exercise in fakery” and demanded a public apology. He also claimed that the deal was “probably cancelled because they didn’t give 40% commission”.

The Congress has been carrying out an anti-corruption crusade against the BJP government, specifically on the charge of taking 40% commissions for projects.

Former CM and JD(S) leader H D Kumaraswamy said the BJP government pursued a policy of “more publicity, zero results”.

Congress leader Priyank Kharge tweeted: “Why would the CM jeopardise such a prestigious investment by doing a publicity stunt? Most investors prefer secrecy till agreements are signed.”

On the Telangana side, it was on March 2, a day ahead of the Karnataka government’s claim, that IT and Industries Minister K T Rama Rao announced that Foxconn had pledged huge investments in the state, and also talked of creation of one lakh jobs.

His announcement followed a meeting between Liu and CM Rao. After the meeting, the CM said Telangana considered Taiwan “a natural partner” and was glad to be a part of Foxconn’s growth story.

Both Karnataka and Telangana are headed for elections this year, with the BJP facing a tough fight to retain power in the former and seeking to give challenge to the Bharat Rashtra Samithi government in Telangana.

Last year, ahead of the Gujarat elections, a joint project of Vedanta and Foxconn which was in the last stages of talks for a site in Maharashtra had shifted to Gujarat. Opposition parties had accused the BJP of sacrificing Maharashtra’s interests over electoral considerations.