Why workers in India attacked an iPhone factory

A view of Taiwanese-run iPhone maker Wistron’s factory in Narsapura, India, on Dec. 13, 2020.

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Workers at an iPhone manufacturing plant in southern India smashed windows and set fire to signs at the factory on Saturday over claims they hadn’t received pay and had been forced to work overtime. The Times of India reported that a “majority” of the 2,000 workers at the factory were involved in the episode, which could undermine Indian Prime Minister Narendra Modi’s campaign to boost the country’s manufacturing sector and could tarnish Apple’s effort to relocate some of its supply chain to the subcontinent.

Apple is reportedly looking into whether Wistron Corp., the Taiwanese tech contract manufacturer that runs the factory, violated Apple’s supplier rules, which ask that a manufacturer’s staffing agencies pay workers on time, offer overtime pay, and provide at least the local minimum wage and any other benefits required by law.

M.D. Harigovind, general secretary of the All India Trade Union Congress, a trade union federation, said in a press release that “the brutal exploitation of workers and sweatshop-like conditions” in the factory caused the unrest.

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Local police said on Sunday they had arrested 100 people and had formed “special teams to investigate the incident.”

Wistron and Apple did not immediately reply to Fortunes requests for comment. A Wistron representative told AFP that “the incident was caused by people of unknown identities from outside who intruded into and damaged its facility with unclear intentions.” Wistron told AFP it would follow local labor regulations and aimed to resume factory operations as soon as possible.

In recent years, the Modi government has pitched India as a manufacturing alternative to China for Apple and other multinational tech firms whose supply chains got tangled in the U.S.-China trade war.

Apple sources 48% of its products’ components from China, but it has increased its stable of contract manufacturers in India of late as the U.S.-China feud threatened to impose tariffs on Apple devices. In addition to Wistron, two other Taiwanese electronics manufacturers—Pegatron and Foxconn—make iPhones in India.

Apple started making iPhones in India in 2017 to comply with local sourcing rules and to establish a bigger foothold in the market. Apple controls just 2% of India’s 500 million–person smartphone market, the second-largest in the world, owing in part to the Indian government’s strict rules for foreign retailers. In August 2019, India relaxed those restrictions—Apple had lobbied it to do so—and the company announced in February that it would open its first physical retail store in India in 2021.

The Wistron factory unrest erupted as India contends with a recession and as workers push back against deregulation that they say the government is pursuing at their expense. In late September, India passed a slew of legislation to deregulate parts of the agricultural industry and reform labor laws, which sparked ongoing nationwide protests.

The three agricultural reform bills that passed in September aim to modernize the sector and boost investment by reducing government oversight of the sale of some crops and easing market regulations on farmers, allowing them to sell directly to commercial buyers.

But many farmers oppose the reforms, which they believe will erase minimum pricing guarantees on some crops and disproportionately benefit big corporations. Hundreds of thousands of farmers and their supporters have participated in ongoing protests against the legislation, blocking highways and trains into New Delhi and calling for strikes to demand the government roll back the laws.

The labor reform laws that passed in the same period will allow more companies to fire workers without government permission and make it harder for workers to unionize and for unions to go on strike.

Business groups largely support the national labor law reforms, believing they will encourage foreign investment and help businesses expand. But labor unions oppose the reforms. In September, when India’s Parliament approved the farm and labor bills, more than 10 major Indian trade unions joined the farmer-led protests against the government.

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