comscore Apple requests Indian government for tax breaks for its suppliers: Report
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Apple requests Indian government for tax breaks for its suppliers: Report

This might require a new policy that could benefit all device makers.

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Apple has reportedly asked the Indian government to extend tax breaks to its suppliers such that it can truly ‘Make in India‘ as opposed to merely assembling iPhones here. Government officials told Reuters that meeting this request would mean India would have to formulate a new policy that applies fairly to all device makers, and not just Apple. The tech giant had earlier asked for tax-free imports; the government agreed to offer that provided Apple expanded its manufacturing base here. Also Read - PUBG New State receives over 17 million pre-registrations as closed alpha testing ends

Also Read - iPhone selling in LG stores? Apple is apparently in talks for a new deal 

Both parties have been looking at a list of “prerequisites” that Apple had submitted in October. It includes things like duty exemption on raw materials for manufacturing components, and capital equipment for 15 years for Apple to make iPhones from scratch here in India. One official reportedly said that the government was looking at the proposal favorably. He added that a similar deal with car-maker Maruti Suzuki had been successful in the past, and led to a vibrant network of local businesses that supplied components. ALSO READ: Apple earnings: Tim Cook reports double digit growth in India even as global iPhone sales flatten Also Read - Apple CEO Tim Cook claims iOS is more secure than Android

If Apple can get the government to repeat the tax concessions it gets itself for all its suppliers, it will bring down the overall cost of making an iPhone, and benefits could eventually be transferred to the end consumer. My view is that India needs to support Apple to create an ecosystem, which was done for Maruti… Initial support will pay rich dividends in the long run and facilitate innovation, design and manufacturing of electronics components in India, a government official told Reuters. Apple, however, declined comment.

Apple started to assemble iPhone SEs in India May. A month later, CEO Tim Cook met PM Narendra Modi to seek permissions for Apple to open retail stores in India. Apple products are sold only through third-party authorized re-sellers for now. India requires companies to source 30 percent of the products from within the country in order to be able to open branded retail stores. Apple hasn’t reached that yet. However, Cook underscored the importance of Apple in the country by highlighting the number of jobs (nearly 7.5 lakh) it had created for the app economy. Additionally, there are over 1 lakh apps created by Indian developers on the Apple App Store. ALSO READ: Apple might launch a new iPhone SE in August: Report

With sales dipping majorly in China, India has emerged as a crucial market for the iPhone-maker. Apple holds less than three percent of the smartphone market here, but it leads the premium segment. It captured a massive 62 percent of all sales in the over $450 category, according to Counterpoint Research. This was led by sales of the Apple iPhone 7, which is not being manufactured in India as of now. If Apple gets the government to yield to its new tax requests, India would become the world’s second iPhone production centre after China.

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  • Published Date: August 2, 2017 10:00 AM IST


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