Foxconn, the largest contract manufacturer of phones/gadgets and hardware globally, has zeroed in on Sri City in Andhra Pradesh to locate a manufacturing facility, according to sources close to the development.

The $131.8-billion (2013) Taiwanese giant is planning to set up several units in the country involving significant investments. According to the sources, the Foxconn CEO indicated plans to set up 10-12 manufacturing units and possibly create one million jobs by 2020. The initial focus will be on Gujarat and Maharashtra, besides AP. Foxconn is also looking to set up data centres and invest in start-ups. Chinese mobile phone companies like Xiaomi and Gionee are among those that have outlined plans for manufacturing in India and they could team up with Foxconn.

Enthused by the Narendra Modi Government’s call for ‘Make in India’ and his Digital India initiative, Terry Gou, Chief Executive Officer of Foxconn, and his team have been scouting various locations across the country. But they are to set the ball rolling in Andhra Pradesh, which they find very investor friendly.

Andhra Pradesh Chief Minister N Chandrababu Naidu met with Terry Gou late on Thursday and, according to the sources, they discussed the location for setting up a manufacturing base for cell phones and other gadgets.

During the meeting with Naidu, policy related issues and the support of the State government in setting up the manufacturing facility and labour related norms were discussed. On a request from some of the manufacturing units in Sri City, the State Government has already tweaked labour laws, including allowing three shifts.

The AP government presented Chittoor as one possible location but Foxconn wants to start off at Sri City to facilitate easy shipments to other markets in India because of its proximity to the Krishnapatnam port and to Chennai, which is about 60 km away. According to the sources, Foxconn already manufactures cell phones from a facility in Sri City though this is a low key affair.

According to the sources, Foxconn will start off in Sri City at a facility to be built to its specifications. Subsequently, the company will set up a larger unit.

The AP Government is also looking at attracting electronics companies at a site contiguous to Sri City, and has taken certain policy initiatives including refund of stamp duty and registration charges for land as also VAT rebates.