Apple seeks more Indian tax breaks
• US company wants concessions for its suppliers if the nation is to become the only iPhone manufacturing centre outside China
Apple has asked the Indian government to extend tax breaks to its suppliers if India seeks to become a manufacturing hub for iPhones.
Apple has asked the Indian government to extend tax breaks to its suppliers if India seeks to become a manufacturing hub for iPhones and its components.
Government officials in India say meeting Apple’s request would require a new policy that applied fairly to other device makers, too.
The US technology company has been in talks with Indian officials since May 2016, when CEO Tim Cook and Prime Minister Narendra Modi agreed to set up a production base that goes beyond assembling the devices, as happens today.
The two sides have been discussing “prerequisites” that Apple submitted, including duty exemption on raw materials for manufacturing components and capital equipment for 15 years for it to make iPhones from scratch in India. Apple told the government it would bring in a host of these ancillary units when it set up operations to cater to India, one of the fastestgrowing smartphone markets, a government official said.
“They want the same treatment to be given to the component manufacturers. But then some kind of policy will have to be evolved,” the official said. Apple declined to comment. The demand could further delay Apple’s plans to penetrate the Indian market, the thirdlargest 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% year on year, to $10.7bn 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.
For India, which would be only the second iPhone production centre after China, such an investment would be a big win for Modi’s Make in India campaign. It would also spawn a vast network of suppliers in the way that India’s motor vehicle ancillary sector took off to feed Maruti Suzuki India’s production line three decades ago.
Another official, who has led efforts to secure foreign investment in the manufacturing sector, said Apple’s proposal to build its phones in India was being examined favourably.
“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.
Apple competitors such as South Korea’s Samsung Electronics and China’s Oppo could also benefit from a broader policy review as their operations in India are predominantly related to assembly.