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Apple says ready to make in India, govt considers relaxing norms

In a crucial meeting with the Indian government on Wednesday Apple Inc indicated that it is ready to start manufacturing here. Apple is believed to have conveyed their growing frustrations with rising labour cost in China; its main manufacturing hub. But Apple Inc has a long list of incentives and tax sops that it wants before it starts manufacturing in India. Top sources indicate that the government is considering certain relaxations in electronic manufacturing that will benefit Apple.

business Updated: Jan 25, 2017 18:03 IST
In a crucial meeting with the Indian government on Wednesday Apple Inc indicated that it is ready to start manufacturing here. Apple is believed to have conveyed their growing frustrations with rising labour cost in China; its main manufacturing hub.
In a crucial meeting with the Indian government on Wednesday Apple Inc indicated that it is ready to start manufacturing here. Apple is believed to have conveyed their growing frustrations with rising labour cost in China; its main manufacturing hub.

As Apple Inc presents its ready-to-execute manufacturing plan to the government, top sources say that India is also ready to facilitate the iPhone-maker.

In a crucial meeting with the Indian government on Wednesday Apple Inc submitted its India plans. But Apple Inc has a long list of incentives and tax sops that it wants before it starts manufacturing here.

Top sources indicate that the government is considering certain relaxations in electronic manufacturing that will benefit Apple.

Read: India’s importance grows as Apple CEO Cook’s pay slumps on falling sales

The government is likely to relax the local sourcing norm for the iPhone-maker to eight years, keeping with its commitment towards companies that bring in “cutting edge technology” into India.

A foreign brand looking to open single-brand retail stores in India is mandated to source 30% from Indian manufacturers within three years of setting up shop.

“Apple wanted 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.”

Read: Apple CEO Tim Cook says it’s the right time to be in India

Sources in the government say that further sops are under consideration for electronic manufacturing in India, which will also benefit Apple among others.

If a manufacturer assembles phones in India, it will only pay 1% duty on the finished devices instead of 12.5%. Also, local assembly of earphones, adapters (chargers) and batteries will attract only 2% of import duty rather than 12.5% that is applicable on imported accessories.

Three departments within the Indian government are looking into Apple Inc’s list of demands. They are: the department of industrial production and promotion, department of revenue and department of information and technology. This panel met today to take a final call on Apple’s proposal and demands.

Read: MacBook launch: Will the new PCs cure Apple’s Achilles heel in India?

“Apple has been looking for several duty and tax incentives for manufacturing handsets in India, but the government is unlikely to make any exception for one company,” said a top official in one of the departments mentioned above. Speaking to HT on conditions of anonymity, the official said that any exception for the iPhone manufacturer will defeat the purpose of an integrated policy such as Make-in-India.

Apple Inc in a statement said that “it was working hard to develop our operations in India.”

“We appreciate the constructive and open dialogue we’ve had with government about further expanding our local operations.”

Read: As Apple’s iPhone turns 10 today, Cook says just getting started

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.

In May 2016, Modi and Cook agreed to work towards a “package” of four projects: assembling iPhones, opening Apple stores, importing certified pre-owned iPhones and refurbishing them in India, according to the letter.

Apple said its initial focus was to set up manufacturing of iPhones in India over two phases, the first of which was to be introduced by spring this year.