Apple seeks tax breaks for suppliers

New Delhi, Aug. 1: Apple has asked the government to extend tax breaks to its suppliers if India seeks to become a manufacturing hub for iPhones and its components.

The government officials say meeting this request would require a new policy that applies fairly to other device makers, too.

The US tech giant has been in talks with officials since May of last year, when CEO Tim Cook and Prime Minister Narendra Modi agreed to set up a production base in the country that goes beyond just assembling the devices, as happens today.

The two sides have been discussing a list of “prerequisites” that Apple submitted in October, including duty exemption on raw materials for manufacturing components and capital equipment for 15 years for it to make iPhones from scratch in India.

The company has told the government it would be bringing in a host of these ancillary units when it sets up operations to cater to India, one of the world’s fastest growing smartphone markets, a top government official said.

“They want the same treatment to be given to the component manufacturers; the tax concessions, they want everything. But then some kind of policy will have to be evolved,” the official said.

The tech giant declined to comment. The demand could further delay Apple’s plans to penetrate the Indian market, the world’s third largest for smartphones behind the US and China, but where it has only a 2 per cent share.

The company is looking to India after sales in the Greater China region, once a major growth driver, slid 14 per cent y-o-y to $10.7 billion in the three months ended April 1.

In May, Apple, working with Taiwanese contract manufacturer Winstron, began assembling the iPhone SE in Bengaluru.

The plan that Mr Modi and Mr Cook ordered the both sides to work on, however, envisages manufacturing a full range of iPhones for the market. — Reuters