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Apple may make in India, but with more incentives

business Updated: Dec 21, 2016 11:06 IST
Apple Inc

A file photo showing the Apple logo at the company's Fifth Avenue store in New York. (AP)

Apple may soon start manufacturing iPhones and iPads in India. However, it wants more incentives from the government under the latter’s Make in India programme to do so.

The government offers several initiatives, including differential duty structure, modified special incentive package scheme (MSIPS) and zero-duty on import of all components except adapters, batteries and headsets, for global and local manufacturers, under Make in India.

The iPhone maker is in talks with the government for higher sops and benefits under the scheme, government sources told HT on conditions of anonymity.

Local manufacturing will help Apple open retail stores in the country. Taiwan’s Hon Hai Precision Industry Co Ltd (Foxconn), which makes Apple devices, has a manufacturing facility in southern India.

Apple CEO Tim Cook has said that the company was looking at India as the next big market. Apple was not in India for a year or two, instead “100s of years”, Cook said during his visit to India earlier in the year.

Apple did not respond to HT’s requests for comments for this story.

Aimed at promoting electronic manufacturing, MSIPS provides capital subsidy of 20% in special economic zones (SEZs) and 25% in non-SEZs, in the form of reimbursement of excise for capital equipment. For high-capital investment projects, it also provides for reimbursement of central taxes and duties.

Also, if a handset-manufacturer assembles phones locally, then it just pays a 1% duty, instead of the 12.5% on a phone that is imported. There is also a duty differential on battery, adapter and headsets. If a handset-maker purchases all these from domestic companies, it pays only 2%, instead of 12.5% when imported.

“Apple might want MSIPS and other incentives to continue even after the introduction of the GST. It could also look at income-tax holiday in the country similar to China and Vietnam,” an industry expert told HT.

Earlier, the Tim Cook-led company had sought relaxation of local sourcing norms under the shield of ‘state-of-the-art and cutting edge’ technology providers.

A foreign brand looking to open single-brand retail stores in India is mandated to source 30% from Indian manufacturers for a minimum period of three years. The government had extended it to five years in case of Apple.

“Apple wants higher exemptions since there are not many high-end phone-component makers in India to buy from,” said a government official, who did not wish to be named. “The company will have to manufacture the components in India, and it has to meet international standards.”