Wistron's India experience prompts investors to rethink investment

Wistron, a major Apple supplier headquartered on the Taiwan island, on Tuesday pegged at around $7 million the damage caused by workers who vandalized its factory at Narasapura, about 65 kilometers from Bangalore in southern India, over the weekend.

Although the trigger for the violence－the workers allege they were not being paid wages properly－is still being investigated, the incident might prompt Wistron to suspend its plans to expand operations, and its client, Apple, might rethink its "Make in India" plan.

If so, the Narendra Modi administration's efforts to attract foreign investment might receive a heavy blow. Apple had claimed three years ago that it wanted to transfer its manufacturing unit from China to India to ease overreliance on supply chains here and tap into India's cheap labor and huge market potential.
Wistron's Narasapura unit, which came into operation in August, is part of that initiative. Apple must have learned a lesson from the incident.

The workers have been grumbling about endless overtime work from the time the factory opened, and the salary they received－between 8,000 rupees ($108) to 12,000 rupees－is allegedly only two thirds of what they had been promised.

As a matter of fact, the Indian workers' experience is not very different from that of some in Taiwan enterprises where overtime work is not rare and the promised salary is often linked to working overtime.

The incident, which is only the latest in a series of similar confrontations between laborers and employers in India in recent years, might trigger chain reactions. It could worsen the overall environment for foreign investment, prompting potential foreign investors to have second thoughts before investing in the country that many are seeing as an alternative to China for foreign investment.

True, India's market is huge and the labor price is low. However, business operation costs, the quality of labor, the efficiency of government services, the state of the infrastructure facilities, and the general business environment are also key factors that no investor can afford to ignore while making investment plans.