Apple’s contract manufacturer Foxconn is reportedly making a huge investment of over $5 billion over the next five years to build a small number of factories in India. According to a report from the Financial Times, the first factory will be located in Maharashtra. Foxconn founder Terry Gou and the city’s CM Davendra Fadnavis recently met up in Mumbai to sign a memorandum for a future project. The report comes a month after the firm announced plans to open up factories in India and hire about one million employees. All of this means the iPhone 7 could well be assembled at an Indian factory.

Apple Inc. May Assemble iPhone 7 In India

Apple makes investment in India

Apple’s purported decision to move manufacturing to India may have something to do with China’s growing wage inflation, as many manufacturing companies are leaving in favor of other low cost areas. Moreover, Apple isn’t the only company to make the move to India. Automaker General Motors recently invested $1 billion to expand their Pune factory. Both companies are taking part in PM Narendra Modi’s Made in India plan, an initiative that encourages foreign companies to make investments in the country.

A shift in the smartphone industry

Foxconn’s move may also start a shift in the smartphone industry. Many believe India will be one of the next frontiers for tech companies to set up factories and open up more employment opportunities. The decision will also prompt more suppliers to come to India in order start operations by 2020. Apple will also experience the strong advantage of having logistics in a different country, and this will benefit the iPhone 7 maker with a less expensive means to distribute products throughout the world and cut back on shipping/transportation costs.

Although Apple’s move will give the company more leverage in the huge Indian market, the tech giant will also face serious competition from local smartphone makers that sell good quality mobile phones for much lower prices.