Having reportedly agreed to manufacture iPhones in India as part of the government’s’ “Make in India” campaign, Apple had the platform set for tapping into the exponentially expanding Indian smartphone market. There was no ambiguity whatsoever when it came to the benefits in store for the company. For starters, India’s ability to present vast pools of skilled and unskilled workforces at relatively much cheaper cost is a tempting deal in itself for most overseas companies like Apple.
Add to that the fact that manufacturing iPhones in India locally would enable the company to sell the handsets at a lower price in the country. That, in turn, could help boost the sales of at least some iPhone models in the price sensitive market. However, Apple wanted to extract more out of the deal. It wanted the Indian government to grant a number of concessions in the form of tax breaks, as well as other cost-saving deals. Unfortunately for Apple, New Delhi was not too thrilled about these demands for concessions and exemptions.
In fact, as it turned out, the BJP-led central government has reportedly turned down several of these demands, thus effectively pushing the ball to Cupertino’s court.
While it is not unusual for businesses to ask for exemptions from the local government when starting manufacturing plants in a foreign country, it seems Apple’s demands were a few too many for New Delhi’s comfort zone.
According to the Asian Age, the exemptions demanded by Apple included:
- Duty exemption on manufacturing and repair units over a period of 15 years
- Duty exemption on capital equipment, consumables, and components over a period of 15 years
- Duty exemption on smartphone manufacturing and service for a period of 15 years
- Relaxation of 30% local sourcing of components
- Lowering of total custom duties
There is no verifiable information as to which of these demands were refused by the government. Also, there is no confirmation of any kind regarding the possible impact this new development could have on the ties between the two parties.
What do you think — is India right to decline some of the aforementioned demands? Do let us know in the comments below.