Apple Inc has asked the Indian government to extend tax breaks to its suppliers if India seeks to become a manufacturing hub for iPhones and its components. Government officials say meeting this request would require a new policy that applies fairly to other device makers, too.
The US tech giant has been in talks with Indian officials since May of last year, when CEO Tim Cook and Prime Minister Narendra Modi agreed to set up a production base in the country that goes beyond just assembling the devices, as happens today.
The two sides have been discussing a list of “prerequisites” that Apple submitted in October, including duty exemption on raw materials for manufacturing components and capital equipment for 15 years for it to make iPhones from scratch in India.
The company has told the government it would be bringing in a host of these ancillary units when it sets up operations to cater to India, one of the world’s fastest growing smartphone markets, a top government official said.
The demand could further delay Apple’s plans to penetrate the Indian market, the world’s third largest for smartphones behind the United States and China, but where it has only a 2 percent share.
The company is looking to India after sales in the Greater China region, once a major growth driver, slid 14 percent year-on-year to $10.7 billion in the three months ended April 1.
In May, Apple, working with Taiwanese contract manufacturer Winstron, began assembling the iPhone SE in Bengaluru.
The plan that Modi and Cook ordered the two sides to work on, however, envisages manufacturing a full range of iPhones for the domestic market, as well as for export.
By Baishakhi Dutta
