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Wistron violence: India in damage control mode to save 'make in India' campaign

The Indian government at New Delhi, and the State government in Karnataka, are in troubleshooting mode to tackle the fallout of the unseeml...

The Indian government at New Delhi, and the State government in Karnataka, are in troubleshooting mode to tackle the fallout of the unseemly riots at Apple iPhone assembler Wistron's factory in Narasapura, 60 kms from Bengaluru on Saturday last.

As the case triggered negative international headlines, especially at a time when India is trying to wean over companies from China and set up units here, the government is pulling out all stops to ensure that the Saturday night violent events don't repeat in other units.

India has already assured Wistron of a speedy and fair investigation into the incident in which workers went berserk at the Wistron facility over alleged non-payment of salary dues. Wistron though says that the violence was perpetrated by outside forces. The rioters, who the local media reported as the factory's staff, smashed windows and set fire to vehicles to protest reductions in salary.

Meanwhile, at New Delhi, a high-level meeting was chaired by the Union Cabinet Secretary to take stock of the incident as the government reached out to all stakeholders to quickly resolve the issue and restart production.

India worried over 'make in India' campaign getting hit

The Indian government is understandably worried over the fact that the riots at Apple iPhone-makers unit is getting the country a bad press.  The Taiwanese company, one of Apple's top suppliers, had been hiring in significant numbers at the plant that became operational earlier this year.

Wistron is assembling iPhone SE at the plant and was expected to start producing newer models. The violence has, however, raised some uncomfortable questions for which India has to find answers quickly and assuage some nervy investors.

Wistron had committed itself to Indian government's PLI scheme and was to invest around $15 million over the next five years. But with its now schedule now obviously hit, it is doubtful whether Wistron will be in line to receive the government's lucrative incentive (it is connected to its production numbers.)

At a larger level, Apple has used India as a base to widen assembly beyond China. Now this incident has also queered the pitch for Apple, too.

Apple has three contract phone-makers in India. Apart from Wistron, the other two are Foxconn and Pegatron. They have committed an investment of $900 million over the next 5 years in India under Indian government's PLI scheme.

International pressure on India

Hanging in balance right now is the length of the production halt, possible changes in Wistron’s relationship with Apple after this incident, and the progress of Wistron’s phase 2 capacity expansion.

The incident has also made some Taiwanese politicos to take hard stance. Chinese Nationalist Party (KMT) Legislator Wen Yu-hsia has urged Taiwanese government to “get tough.”

“We encouraged our people to invest in India. We have signed a BIA with India, and now this kind of thing happened,” Wen said. “The government needs to get tough and support Wistron in negotiations with the Indian government.” 

James C F Huang, Chairman, Taiwan External Trade Development Council (TAITRA), has been quoted in a Reuters report as saying: “We do hope that the Wistron incident in Bengaluru would be resolved as soon as possible and any harm will be controlled and give Taiwanese companies more confidence.” 

“We also need support of local governments to relocate operations and to prevent any event such as what happened in Bengaluru just now.”

Damage not as bad as originally feared: Wistron

Meanwhile, Wistron has said that the damage to its iPhone factory is much less than has been reported.

A “preliminary” assessment of the damage from Saturday’s riot was between $3.51 million and $7.03 million, and not as originally claimed, the company said.

“On the topic of the violent unrest at our Narasapura plant, we are doing our best to recover from and assess the damage. The main production equipment and warehouses have not been as seriously damaged," it added.



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