Foxconn, the Taiwanese contract manufacturer, has been awarded a contract to produce Apple's AirPods and reportedly intends to construct a factory in India specifically for the manufacturing of wireless earphones. Two people with direct knowledge of the matter told Reuters.

Under this deal, Foxconn, which is responsible for assembling approximately 70 percent of all iPhones, will now also become a supplier of AirPods, marking the first time it will produce these products. This moves highlights Foxconn's efforts to diversify its production away from China. Currently, a variety of Chinese suppliers manufacture AirPods.

Reportedly, Foxconn is planning to invest over $200 million in building the new AirPod manufacturing facility in the southern Indian state of Telangana. However, the value of the AirPod order itself has not been disclosed yet.

Reports came that Apple and its manufacturing partner Foxconn were among the companies behind a landmark liberalization of labor laws in the Indian state of Karnataka last month, according to three people familiar with the matter.

Their successful lobbying for new legislation means two-shift production can take place in India, akin to the two companies’ practices in China, their primary manufacturing base. The law gives the southern state one of the most flexible working regimes in India as the country aims to become an alternative manufacturing base to China.

Apple and its key suppliers have been shifting production away from China, where strict COVID-19 curbs disrupted Foxconn's biggest iPhone factory last year. They are also seeking to avoid a potential hit in business from mounting Sino-U.S. Trade friction.

Foxconn said on Wednesday it would ramp up investment outside China to meet customer demand and lower its reliance on China for production.