The Commerce Ministry does not favour granting concessions to American multinational tech major Apple for establishing manufacturing unit in India for products including iPhones and iPads, according to high-level sources in the government.
This is because other companies have not sought similar concessions — including easing labelling and local sourcing norms as well as reducing excise and import duties — for starting manufacturing in the country, and therefore the government will not be able to relax rules only for Apple, the sources said asking not to be quoted. Over 40 companies are manufacturing mobile phones in the country. Apple India did not give any response to The Hindu’s queries on the issue.
India is among the largest smartphone markets in the world, and the California-headquartered Apple is looking to expand its market-share in the segment in the country from the current level of around two per cent. However, Apple only operates in premium smart phone category, where its share is much higher. According to reports, the Taiwan-headquartered Wistron Corporation, an original design manufacturer, has initiated plans to establish manufacturing unit in Bengaluru for Apple.
While setting up manufacturing plant in India — to cater to the local market and even for exports — will help cut costs given the factors including relatively lower labour costs (than say in China), duty and other concessions are expected to push up that advantage further for Apple. However, the sources said the Indian government is keen that Apple does substantial value addition in the country and ensure that local supply chains grow as well — thereby generating employment, increasing manufacturing and exports. An inter-ministerial panel including officials from the departments of industrial policy and promotion (DIPP), commerce, revenue, electronics and information technology and environment & forest are looking into the issue.
Currently, there is the Modified Special Incentive Package Scheme to promote manufacturing of electronic items in India. There are incentives for investments in Special Economic Zones. The government was looking into Apple's proposal seeking exemption from 30 per cent local sourcing norms on FDI in single brand retail. The commerce ministry had said earlier that it was not in favour of relaxing rules for Apple to sell refurbished second-hand phones in India. Earlier, though a government panel led by DIPP secretary had suggested that Apple can be exempted from local sourcing rules as a pre-condition to set up single brand retail stores in India since the electronic products maker's proposal meets the definition of 'cutting edge technology', the Finance Ministry then turned down the government panel’s decision. Apple is learnt to have sought the waiver on the ground that it manufactures ‘cutting-edge technology’ items for which it is not possible to source as much from India. The government was looking into whether there is a need for separate guidelines on local sourcing pertaining to the waiver on ‘cutting edge technology’ and what constitutes such high-end technology.
