Apple seeks tax breaks for suppliers in India
Apple Inc has asked the government to extend tax breaks to its suppliers if India seeks to become a manufacturing hub for iPhones and its components.
Meeting this request would require a new policy that applies fairly to other device makers, too, government officials said.
The US tech giant has been in talks with Indian 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.” Apple 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% share.
The company is looking to India after sales in the Greater China region, once a major growth driver, slid 14% yearon-year 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 Modi and Cook ordered the two sides to work on, however, envisages manufacturing a full range of iPhones for the domestic market, as well as for export.
“My view is that India needs to support Apple to create an ecosystem, which was done for Maruti. This helped to build the automobile and auto component industry in India,” the official said, seeking anonymity in line with government policy. “Initial support will pay rich dividends in the long run and facilitate innovation, design and manufacturing of electronics components in India.”
Another government official familiar with the matter said it would be difficult for India to agree to Apple’s request for a customs holiday for just its own operations in India. Customs duties have already been slashed in order to make India a hub for handset assembly lines, the official said.