Foxconn Technology Group has reportedly instructed hundreds of Chinese engineers and technicians to return to China from its iPhone factories located in India. This move, which began approximately two months ago, is considered a setback for Apple Inc.'s efforts to expand manufacturing in India.

Sources familiar with the matter, who requested anonymity, indicated that the majority of Foxconn's Chinese staff at the iPhone plants in southern India have been asked to return home. Over 300 Chinese workers have already departed, leaving mostly support staff from Taiwan in India. The reason for this recall remains unclear, and neither Foxconn nor Apple has issued an official statement regarding the matter.

Several factors could be contributing to this decision. One potential reason is that Chinese officials may be discouraging companies from moving operations away from China. Reports earlier this year suggested that Beijing was verbally encouraging local governments and regulatory bodies to restrict exports of equipment or technologies to India and Southeast Asia. Additionally, China has reportedly been making it more difficult for skilled laborers to leave the country.

Another possible explanation is that with the iPhone production lines largely set up and training ongoing for several years, Foxconn may believe that the Chinese engineers are no longer as essential to the Indian operations. While the expertise in manufacturing iPhones originates from Apple, the company has invested heavily in training Chinese engineering and production staff over many years. Consequently, a significant portion of senior engineers and managers with expertise in iPhone assembly are now based in China.

The withdrawal of Chinese staff could impact the efficiency of the production lines. While the quality of manufacturing may not be immediately affected, potential reductions in output could occur as Foxconn prepares for mass production of the upcoming iPhone 17 range.

Apple has set a goal to manufacture 25% of iPhones in India by 2027. The current situation raises concerns about whether Apple can meet this target, especially given China's desire to retain its position in iPhone manufacturing.