Government officials are questioning the need for special concessions for Apple to set up an assembly unit in the country when no other company is asking for concessions to set up mobile manufacturing unit in Bangalore.
The commerce ministry sees no reason for such favours and is reportedly not in favour of concessions to the US tech giant for setting up a unit here, which is the company’s largest market.
Apple’s proposed investment, which may also include refurbishing used iPhones and iPads, is purely a commercial proposition driven by the motive of maximising profit and the government has only to be a neutral enabler, they feel.
In December, Apple Inc officials met the top brass of the commerce ministry with plans to open stores in India without any plan to source components locally.
Earlier, in November, the US-based iPhone maker had also sought incentives from the government for setting up a manufacturing unit in the country.
In a communication to the government, the Cupertino-based technology major has asked for incentives related to the Department of Revenue and Department of Electronics and Information Technology (DeITY).
Apple is banking on a relaxation in foreign investments norms for single-brand retailing for companies bringing what it called ”state-of-the-art and cutting-edge” technology. The government was also initially willing to extend sops to Apple in order to push its `Make In India’ campaign, but later realised that it would neither drive `Make In India’ nor boost FDI.
For Apple, however, India is becoming more and more important as the main market as its sales in the country crossed the $1 billion mark for the first time in 2015, according to results filed with the registrar of companies.
Apple currently sells its products in India through exclusive reselling arrangements with chains such as Imagine and iStore (owned by Reliance Digital).
Yet, Apple market share in India is a minuscule under 2 per cent, which leaves a huge potential market to be tapped.
India’s high-end smartphone market is still dominated by South Korean rival Samsung Electronics Co Ltd, which has a share of 21 per cent.
In the last two years, many electronic manufacturers have establishing units in India. In August 2015, China’s Lenovo Group Ltd started assembling smartphones at its facility in Chennai run by Singapore-based contract manufacturer Flextronics International. In July 2015, Karbonn Mobile India Pvt. Ltd set up a 150,000 sq. ft plant in Noida in partnership with Water World Technology Co. Ltd.
In the first half of 2015 Xiaomi Corp. and InFocus partnered Foxconn Technology Group and started manufacturing devices at the latter’s Andhra Pradesh facility. In September 2015, Chinese smartphone vendor Gionee tied up with Foxconn and Dixon Technologies (India) Pvt Ltd to manufacture mobile devices.
None of these smartphone makers have sought government reliefs for manufacturing in India.
By Baishakhi Dutta
