The Indian government has requested that US technology colossus Apple must provide them with a detailed vision for its job creation plans in the country – and its long-term investment strategy for manufacturing iPhones in India – before it will even consider the prospect of granted Apple’s request for tax concessions.
Reports emerging from India have claimed that Apple have already entered into negotiations with government officials in relation to its plans to expand smartphone production in a region that boasts the second largest smartphone market in the entire world. It is believed that government officials are considering allowing the US firm to import components tax free as it will increase the local value addition over a certain period of time.
India’s Prime Minister is aggressively pushing his ‘Make in India’ campaign – and Apple have garnered support following its decision to implement steps in order to comply with local content requirements. Research into the smartphone sector in India estimates 75% of all smartphones sold in the country were actually produced and manufactured locally.
In May, the US vendor announced that it had started producing iPhone SE smartphones in India – disclosing that initial production of the devices was between 25,000 and 50,000 units a month. Apple brokered an agreement with the government in February which allowed them to start assembling lower-priced iPhones in the country. Reports from that time claimed Apple proposes to go ahead with production without waiting for governments to approve a list of requested tax incentives.
In the terms and conditions outlined in the contract Apple requested a waiver of custom duties on imports and components for a period of fifteen years. In addition to this, it asked to be exempt from India’s 30% local sourcing requirement. In March, the country’s Department of Revenue rejected all of Apple’s tax incentive requests saying it would not bow to demands from one organization. However, the government conceded that it was reviewing and assessing its overall manufacturing policy in order to stimulate support for Modi’s ‘Make in India’ initiative in a bid to attract more foreign investment.
With growth slowing in China, the world’s largest smartphone market, Apple is looking to take advantage of rapid smartphone growth in India. According to IDC, smartphone shipments in the country increased 14.8 percent year-on-year to 27 million units in Q1.