Apple iPhone maker Foxconn hit as India holds up China imports

India's additional scrutiny of imports from China has disrupted operations at plants owned by Apple supplier Foxconn in southern India, three sources told Reuters, and other foreign firms are also facing delays as tensions between the two countries build.

Customs officers at Indian ports have held back shipments from China and sought additional clearances after deadly clashes at the disputed Himalayan border last month. The checks have been imposed without any formal order.

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While several companies such as Apple and Dell have been battling to free stuck shipments, hundreds of employees at Taiwanese contract manufacturer Foxconn's two plants in the south had no major work to do this week as shipments were delayed, sources said.

More than 150 Foxconn shipments - containing smartphone and electronic parts - were stuck at the port of Chennai, though some are being cleared slowly now, the first source said. The total number of parts in the shipments was not clear.

Foxconn's two plants in Tamil Nadu and Andhra Pradesh mainly assemble Apple and Xiaomi smartphones in the country and employ thousands of workers, many of whom stay in company-provided accommodation.

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"Foxconn was in a very bad state ... lots of workers stayed at the dormitory because there was no work," said the first source.

Foxconn, Apple and Xiaomi did not respond to Reuters queries.

The finance ministry also did not respond. Two officials at the ministry, which oversees the customs department, said the inspection measures were temporary and will ease soon.

"We cannot keep checking 100% of shipments forever ... Shipments of non-Chinese companies being impacted will be cleared on priority," said one official.

While the exact impact of the disruptions is not immediately clear, the delays come when companies in India had already been battling disrupted supply chains due to coronavirus shutdowns in recent months. Business activity has only just begun to pick up.

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Prominent U.S.-India lobby groups and local industry bodies have urged the Indian government to intervene.

While some delayed Dell shipments have been cleared since last week, the company had roughly 130 shipments stuck this week at Indian ports, the second source said. This included around six shipping containers with parts for servers and desktop computers, the person added.

Dell did not respond to a request for comment.

Separately, MG Motor, owned by China's SAIC, also has some shipments stuck at a port in southern India, a source close to the company told Reuters. MG started selling cars in India last year and has committed $650 million in investments.

"The whole (auto) industry will be impacted if components are stuck," the source said.

MG Motor did not immediately respond to a request for comment.

China's Commerce Ministry said on Thursday that it hoped India would correct its discriminatory actions against Chinese companies immediately, after India banned some Chinese mobile apps amid the border crisis.

Reporting by Aditya Kalra and Sankalp Phartiyal.