Explained: How A Series Of Amendments In Factories Act Helped Karnataka Seal Foxconn Deal And Will Boost Its Ambition As Manufacturing Hub

The BJP government in Karnataka on Monday (March 20) approved an Rs 8,000 crore proposal by Taiwanese electronic manufacturing behemoth Foxconn(Hon Hai Technology Group) to set up a mobile phone manufacturing unit near Bengaluru.

The proposal was approved in the State High-Level Clearance Committee (SHLCC) meeting chaired by chief minister Bommai.

The manufacturing facility will come up on 300 acres of land at the Information Technology Investment Region (ITIR) industrial area, Doddaballapur, in Devanahalli Taluk, near the Bengaluru International Airport.

The big-ticket investment by Foxconn significantly boosts the state's plan to emerge as a leader in electronics and semiconductor manufacturing. Another Taiwanese electronics manufacturing giant, Wistron, already has a presence in the state through a 44-acre facility in the Narasapura Industrial Area near Kolar.

In addition to Foxconn's proposal, the High-Level Clearance Committee approved 17 other projects with a total investment of over Rs 65,000 crores, including Ather Energy's electric two-wheelers manufacturing unit in Bengaluru rural district at an investment of Rs 504 crore, Tata Advanced Systems Limited's planned production facilities in Vemgal, Yelahanka, Electronics City Phase-1 and KIA Bengaluru at an investment of Rs 1,030 crore, employment: 450) and Schneider Electric's expansion plan near Anekal.

The slew of investments the state is attracting in the manufacturing sector is credited to a set of amendments in the Factories Act recently introduced and passed by the CM Bommai-led BJP government.

The labour reforms are viewed by the government as essential to its strategy to propel itself as a manufacturing hub. Adopting flexible labour practices is based on replicating a vital element of China's success story.

The Karnataka Legislative Assembly on February 22 passed a bill amending the Factories Act, introducing the following key changes.

• 4-day work week: increasing the number of hours of work from the existing nine hours up to twelve hours inclusive of rest intervals in any day subject to a maximum of 48 hours in any week subject to the written consent of such worker for such work, and the remaining days of the said week for the worker shall be paid holidays.

The amendments will boost the electronics and semiconductor industry, given that their production process is seamless and continuous. The existing regime of three-shift cycles poses operational challenges.

The changes to allow women workforce to operate during the night shift is also a potential game-changer for the growth of mobile manufacturing in the state.

Women's higher precision, focus, and productivity levels make them more sought-after employees than men at mobile handset assembling factories in the country. Women already account for more than 50 per cent of the workforce in many cases, with several manufacturers asking to hire more women specifically. 

"For instance, critical operations like Scope Soldering require the person to solder the components under 10X magnification. The challenge is not just about soldering under a magnifier but focus and precise hand-eye coordination, a trait that seems natural among women. There are also other operations that require the handling of minute components (size up to 0.5mm). Women seem to possess finger dexterity that can be effectively tapped to provide them better opportunities." an industry expert observed.

In 2020, the Karnataka government under the then Chief Minister B.S Yediyurappa introduced even more radical changes to labour laws but withdrew notification after it faced legal challenges.

Through a notification issued on May 22, 2020), the government extended the working hours from eight to 10 per day/60 hours per week to all factories registered under the Factories Act of 1948. The government reasoned that the amendment was introduced to help companies boost productivity which has been affected due to the lockdown.

The Karnataka Employers Association (KEA) had filed a case challenging the State government's notification as illegal, arbitrary and violating Section 5 of the Factories Act.