Indian officials say they won’t give in to demands by Apple for special concessions allowing it to assemble iPhones in India, but the government is reviewing its overall manufacturing policy to stimulate support for its ‘Made in India’ initiative as well as attract foreign investors.
The policy review is aimed at benefitting all handset makers, which also could meet some of Apple’s demands, the Economic Times (ET) reported.
Information Technology Minister Ravi Shankar Prasad said yesterday India would keep an “open mind” in negotiations next week at a meeting with Apple executives. An official told Reuters the government should make policies for the industry, not individual companies.
According to media reports, the US-based company sent the government a letter last month outlining its plans and seeking financial incentives to move some production to India. Senior Trade Ministry officials reportedly have met to discuss the matter after Apple held initial talks with the government about manufacturing its products in the country.
The smartphone giant sought a number of concessions, including a 15-year wavier of customs duties on imported iPhone components, and new and second-hand manufacturing equipment, the ET said.
Three government departments – revenue, industry and IT – are reviewing Apple’s requests. Officials have conceded the country’s import duties are high, which impact the competitiveness of manufacturers looking to export.
The ET quoted an official as saying: “Our objective should be to give them [exporters] the lowest duty so as to ensure their product is competitive. Hence we may even relook at the policy as a whole.”
Indian Prime Minister Narendra Modi is said to have raised the issue of local production of iPhones with Apple CEO Tim Cook when they met last May.
Complicating a move to local production is the country’s local sourcing rules, which require foreign firms with single-brand retail outlets to source 30 per cent of the sales value of their components from India within five years of starting operations.
In June 2016 the government reversed a decision not to ease local sourcing rules for Apple and granted the iPhone maker a three-year waiver on the requirement, which clears the way for it to open Apple Stores in the country. The reversal is part of a major reform package of the country’s foreign direct investment policies announced by the head of the country’s central bank.
India is the world’s second largest smartphone market, where growth outpaced the global market in Q3 as demand for mobile broadband connectivity soars and operators rapidly expand their 4G network coverage.