Apple unlikely to get more sops for manufacturing in India
19 Jan 2017
The government is unlikely to offer further relaxation of norms for Apple Inc to start manufacturing products like iPhones and iPads in India with its contract manufacturer Foxconn, according to reports today.
India is still keen for the US tech giant to produce its signature smartphones here and information technology minister Ravi Shankar Prasad said on Wednesday that India would keep an ''open mind'' in negotiations.
''We would very much like Apple to come and have a base in India,'' he said.
But Apple Inc has a long list of incentives and tax sops it wants before it starts manufacturing in India.
Three government departments are jointly looking into Apple's list of demands - the department of industrial policy and promotion, the department of revenue and the department of information and technology. Their panel will take a final decision on Apple's demands on 25 January.
''Apple has been looking for several duty and tax incentives for manufacturing handsets in India, but the government is unlikely to make any exception for one company,'' Hindustan Times cited a top official in one of the departments as saying. The official said that any exception for the iPhone manufacturer will defeat the purpose of an integrated policy.
Local manufacturing will help Apple open retail stores in the country. Taiwan's Hon Hai Precision Industry Co Ltd (Foxconn), which makes Apple devices, has a manufacturing facility in southern India.
''Apple wants higher exemptions since there are not many high-end phone-component makers in India to buy from,'' said another government official quoted by HT. ''The company will have to manufacture the components in India, and it has to meet international standards.''
Apple chief executive Tim Cook has said that the company was looking at India as the next big market. Apple was not in India for a year or two, but for ''hundreds of years'', Cook said during his visit to India earlier in the year.
The government already offers several initiatives, including differential duty structure, modified special incentive package scheme (MSIPS) and zero-duty on import of all components except adapters, batteries and headsets, for global and local manufacturers, under Make in India.
Aimed at promoting electronic manufacturing, Modified Special Incentive Package Scheme (MSIPS) provides capital subsidy of 20 per cent in special economic zones (SEZs) and 25 per cent in non-SEZs, in the form of reimbursement of excise for capital equipment. For high-capital investment projects, it also provides for reimbursement of central taxes and duties.
Also, if a handset-manufacturer assembles phones locally, then it just pays a 1 per cent duty, instead of the 12.5 per cent on a phone that is imported.
However, Apple seems to want more.
Earlier, the Tim Cook-led company had sought relaxation of local sourcing norms under the shield of 'state-of-the-art and cutting edge' technology providers.
A foreign brand looking to open single-brand retail stores in India is mandated to source 30 per cent from Indian manufacturers for a minimum period of three years. With Prime Minister Narendra Modi's intervention, Apple is likely to see a relaxation on this, from three to five years.
Competitors such as South Korea's Samsung Electronics and China's Xiaomi have already set up manufacturing in the country.
In May 2016, Modi and Cook agreed to work towards a ''package'' of four projects: assembling iPhones, opening Apple stores, importing certified pre-owned iPhones and refurbishing them in India, according to the letter.
Apple said its initial focus was to set up manufacturing of iPhones in India over two phases, the first of which was to be introduced by spring this year.
