Apple Inc is reportedly seeking Indian government’s help in extending tax breaks to its suppliers. So, that India can become a manufacturing hub for iPhones and its components.
However, according to state officials, such an arrangement would require a different law which would apply to other companies as well.
The Apple Inc is in talks with the Indian government over this issue since last May. Tim Cook the CEO of Apple had a meeting with Prime Minister Narendra Modi for a production base in the country. At present, the iPhones are only assembled in India.
Apple is in talks with the Indian Government for duty exemption on the raw materials and capital equipment for up to 15 years.
The company will bring in the ancillary firms along with it when it starts to manufacture in India. In turn, it will create more jobs for the Indians. India is one of the fastest growing smartphone markets. And Apple is keen to make its phones in India to capture this share of the market. At the moment it has 2% market share in India.
Apple, however, wants the same treatment for its ancillary firms as well. This would mean a lot of policy work for the Indian government. Other companies will also demand such concessions as well if Apple is able to seek special privileges.
Apple has declined to comment on this issue.
Apple’s persistence for concessions will further delay its plans to penetrate the Indian smartphone markets. India is a large market for smartphones falling behind the US and China. But then Apple is a distant player in the Indian market.
Apple’s sales have gone down in China. Over the period they have seen a slid of 14 percent on sale year-on-year. That is also one of the reasons that Apple is forging its ties with the Indian government to make some profits in the new emerging market.
Apple is assembling its iPhone SE in Bengaluru. The contract is with A Taiwanese manufacturer Winstron since May.
It will be interesting to see how the Indian government responds to Apple’s demands. As it will define the whole smartphone production in India. And if the demands are granted then India can become a manufacturing hub for iPhones and its components.