Apple unlikely to get special concessions for making in India
Offering Appple tax incentives would mean discriminating against other phone manufacturers that have already set up plants in India, says commerce ministry official
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Apple Inc. is unlikely to receive any special concession from the Indian government to manufacture its iPhones in the country. Offering the Cupertino, US-based company the tax incentives it has sought would mean discriminating against other phone manufacturers that have already set up plants in India, a commerce ministry official said on condition of anonymity.
“Apple is asking for concessions that others are not asking. We have to follow the rule book. Otherwise, anybody can stand up and say why only Apple and why not others,” the official added.
An Apple spokesperson did not respond to emailed queries.
The official said Apple has sought tax concessions, a conducive ecosystem and exemption from local procurement norms.
The Times of India reported on 30 December that Apple plans to make iPhones for the Indian market in Bengaluru through Wistron, a Taiwanese electronic manufacturer that is setting up a facility in Peenya, the city’s industrial hub.
The official cited above said Apple was looking for an exit from China and should set up manufacturing units in India without seeking concessions in return.
This is Apple’s second bid to enter India after failing to get a waiver in local sourcing norms for opening branded stores in India.
Last year, the government relaxed rules governing foreign investment in so-called single brand retail for companies bringing what it called “state-of-the-art and cutting-edge” technology. After initially signalling that it had agreed to Apple’s proposal, it changed its mind, saying what constitutes state-of-the-art needs to be defined first. The official cited above said there has not been any progress on that front so far.
India is becoming important to Apple. Its sales in the country crossed the $1 billion mark for the first time in 2015, according to results filed with the registrar of companies.
Apple currently sells its products in India through exclusive reselling arrangements with chains such as Imagine and iStore (owned by Reliance Digital). In 2012, Apple India changed its sales model by appointing retail distributors and began advertising. Since then, its sales have been rising at double-digit rates and the top management of Apple has acknowledged the importance of Indian operations several times during analyst calls.
Still, Apple has a minuscule market share of under 2% in India’s smartphone market compared with South Korean rival Samsung Electronics Co. Ltd, the leader in India’s smartphone market, which has a share of 21%.
In the last two years, many electronic manufacturers have establishing units in India. In August 2015, China’s Lenovo Group Ltd started assembling smartphones at its facility in Chennai run by Singapore-based contract manufacturer Flextronics International. In July 2015, Karbonn Mobile India Pvt. Ltd set up a 150,000 sq. ft plant in Noida in partnership with Water World Technology Co. Ltd.
In the first half of 2015 Xiaomi Corp. and InFocus partnered Foxconn Technology Group and started manufacturing devices at the latter’s Andhra Pradesh facility. In September 2015, Chinese smartphone vendor Gionee tied up with Foxconn and Dixon Technologies (India) Pvt. Ltd to manufacture mobile devices.
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