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Give me more, demands Apple but government declines

Team YS
7th Feb 2017
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Apple approaches the government for special waivers, but commerce ministry declines as it involves policy changes and giving the tech giant an unfair advantage.

iPhone-maker Apple’s bid to manufacture in India has run into a rough weather with the global giant wanting to extract stiff concessions for itself which includes customs waiver and excise benefits over the next 15 years.

Apple wants customs and excise benefits

An Apple Inc team has been making the rounds of the power corridors in Delhi from the last week of January and has met officials of the commerce and other ministries to seek tax concessions for manufacturing and setting up its stores in India.

Apple had already announced it will start an assembly unit for iPhones in Bengaluru, but the centre has expressed its inability to treat the global giant differently as it would mean giving it a favourable treatment while ignoring the requests of other companies which had set up shop earlier.

The government also said as this involves different ministries, the sector as a whole should be considered and not just one player.

“We cannot change the rules for just one player in the sector. It would be very unfair,” Commerce Minister Nirmala Sitharaman has said.

After the government started promoting its Make in India initiative, many phone brands have started assembling in India which include LeEco, Hauwei, LG, and others. Apple sold 2.5 million units last year and is a leader in the premium phone segment.

While Apple India spokesperson has only spoken of the company’s keenness to assemble the phones in India and source upto 30 perent of parts locally, Sitharaman indicated that if Apple is given such as advantage, it will be unfair as none of the other players are getting any special benefits in the phone manufacturing sector.

Apple wants customs exemptions for parts that will be imported and assembled at its manufacturing unit that it will set up in Bengaluru. This is a similar problem that luxury and city bus manufacturer Volvo has been facing. The cost of a Volvo bus is more than double compared to Marcopolo, a similar city-commute bus from the Tata stable manufactured at Hubbali in Karnataka.

Many state transport corporations have been approaching the centre to reduce the import duty of parts that goes into assembling the Volvo chassis and body at its assembly unit at Hoskote near Bengaluru. The centre has already communicated that it cannot take a view on a single unit as it will affect the whole manufacturing industry in the sector. “We had approached the centre as these buses could be bought under the Jawaharlal Nehru National Urban Renewal Mission and if the duties would be exempted, state transport corporations could buy more units and save money the government monies,” a state transport officer told YourStory.

A Taiwanese company, Winstron, is set to manufacture iPhones at Peenya Industrial Estate on behalf of Apple from May-June onwards. In 18-months’ time, the company will source around 30 percent of the components from local ancillaries, a concession the Karnataka government extracted from Apple, state IT minister Priyank Kharge had announced last week.

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