Apple’s makeinIndia plans hang in the balance
NEWDELHI: The second phase of Apple Inc.’s plan to make the iPhone in India is hanging in the balance as the firm awaits government approvals and tax breaks that it says are key to making a profit, a person aware of Apple’s plans for the market said. “Else, it doesn’t make sense for Apple to import components by paying heavy duties from other parts of the world to assemble and sell here,” the person said on condition of anonymity.
In the first phase of its India plan, Apple started working with Taiwanese contract manufacturer Wistron Corp to assemble the iPhone SE in Bengaluru. If Wistron doesn’t find it a profitable proposition and decides to stop manufacturing, Apple will discontinue phase one, said the person cited above.
Wistron declined to respond to a questionnaire on the duration of its contract with Apple and the sustainability of the business model.
“We are very happy that Apple has started their phase one manufacturing of mobile phones in India,” said Ajay Kumar, additional secretary in the ministry of electronics and information technology. “We look forward to them expanding their manufacturing footprint in India. We also welcome if the ecosystem of component manufacturing units of Apple also move with them. Talks are being held with Apple by government. ”
Apple did not answer a detailed email from Mint on AIPL’s response to government’s queries and its next steps in India.
The company has tried to explain to the government in discussions earlier that if the company manufactures (not just assembles) the iPhones in India, it can say it is investing in India, this person said.
“Right now, the company is only paying others to get the services. So, for instance, it has paid Wistron to set up the plant in Bangalore on their behalf. Today, Wistron is manufacturing for Apple Inc., tomorrow they can manufacture for someone else there.”
Importing components by paying heavy duties is not “a viable option” for Apple, he said. Use of local content, however, is. “If India is set to become the largest smartphone manufacturing hub in the world, attracting component manufacturers here with good rebates, deduction of duties and tax breaks makes sense. Not just Apple Inc., other companies too will benefit,” the person said.