Yuzhan Technology, a part of Taiwan's Foxconn Group, has leased about 550,000 square feet of warehousing space at ESR Industrial Park in Oragadam, located on the outskirts of Chennai. This comes amid a sharp rise in exports of Apple iPhones from India.

The warehouse facility is one of the largest in India for Foxconn, which is among the three contract manufacturers and exporters of iPhones from the country. The other two contract manufacturers are Wistron (now owned by the Tata group) and Pegatron.

Foxconn will pay a monthly rental of INR 26-28 per square foot for a period of 10 years. This underscores Foxconn's commitment to scaling up its operations in response to growing demand for Apple products made in India. The new facility will help Foxconn optimize its supply chain and logistical capabilities to support expanding export activity.

A source mentioned that the company has acquired 320,000 square feet of dry storage space and signed a letter of intent for the remaining 230,000 square feet, as the building is still under construction.

ESR Industrial Park spans 100 acres with potential for 2.2 million square feet of leasable space for both warehousing and industrial use. Current clients include Cubic, Siemens, A2MAC1, New Century Sofa, and Checkpoint.

As per Cushman and Wakefield's annual Logistics and Industrial report, Chennai gained market share in logistical and industrial warehouse leasing activity in 2023, driven by demand from third-party logistics players and manufacturing. Chennai remains the second biggest logistics market in the country after Mumbai with 19%, and second after Pune in industrial warehousing space, holding 24% of the market.

Chennai witnessed 10.78 million sq.ft. (msf) of overall leasing activity in 2023, over 5.16 msf recorded in 2022. Warehouse leasing activity stood at 6.97 msf, nearly two-fold increase compared to 2022. Oragadam submarket, the key industrial corridor of electronics and automobile manufacturing, apart from logistics players, witnessed a gross leasing of 2.14 msf, growing five times compared to 2022, the report noted.

Foxconn, the world's largest contract electronics manufacturer, has been expanding its manufacturing facilities in India, particularly in the southern part of India. In addition to its existing iPhone assembly unit in Tamil Nadu, the company is looking to double its workforce and investment in India by 2024. Through its Indian investments, Foxconn aims to leverage the country's favourable business environment and tap into growing demand for electronics in the region.

Foxconn, which has the biggest iPhone assembly operations in India, currently hires more than 40,000 people at its plants in Tamil Nadu. Pegatron has a relatively smaller operation and employs around 10,000 workers. Winstron plant, acquired recently by Tata, employs 27,000.

Apart from Foxconn, Pegatron and Tata which assemble iPhones, there are 11 other firms that have set up bases in India to supply various components needed to make the phones.

Apart from Foxconn, Pegatron and Tata, which assemble iPhones, 11 other firms have set up bases in India to supply iPhone components. This includes suppliers of cables, batteries, casings and chargers from countries like Taiwan, the US and China. For instance, Foxlink, a subsidiary of Taiwanese Cheng Uei Precision Industry Co Ltd, based in Andhra Pradesh, makes cables for iPhone chargers. Apple sources battery packs from the US-based Flex Ltd, which has factories in Pune, Chennai, and Bengaluru, among others.

India exported smartphones worth around USD 15 billion in 2023-24, of which iPhones contributed 65%, or about USD 10 billion - up from USD 5 billion in the previous year. As per a Bloomberg estimate, in FY24 one in seven iPhones sold globally was made in India. By 2028, the government expects a quarter of all iPhones to be made in India, with some of its accessories, such as AirPods also being assembled in the country. In the next two-three years, Apple wants to ramp up its iPhone production in India to more than 50 million units per year.

While some foreign suppliers have started manufacturing in India, this number is a fraction compared with Apple's suppliers in China. The industry believes India needs to fix its act on the import tariff front. High import tariffs are typically put in place to prioritise the domestic industry, but experts have argued that in the absence of a local industry - as is the case with component makers in India - such high tax rates act as a deterrent for companies to invest in the country.

Thus, the demand for industrial and logistics space in Chennai continues to grow strongly, driven by sectors like electronics manufacturing, automobiles and FMCG. Major industrial parks like Oragadam play a key role in attracting investments from global companies looking to leverage India's manufacturing potential. The Foxconn lease highlights the strategic importance of Chennai as an export hub catering to both domestic and international markets.