India offers tax
concessions to Apple to expand production: official
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[May 23, 2017]
By Manoj Kumar
NEW
DELHI (Reuters) - India has offered to allow Apple Inc <AAPL.O> to
import mobile handset components intended for use in local manufacturing
tax free, a top government official said on Tuesday.
The tax concessions will be subject to the condition of increasing local
value addition over a period of time.
Apple Inc wants to expand its contract manufacturer's facility in the
southern Indian tech hub of Bengaluru, a federal minister said on
Tuesday, as the iPhone maker seeks a bigger share in one of the world's
biggest smartphone markets.
Cupertino, California-based Apple last week started making iPhone SE at
its Taiwanese contract manufacturer Wistron's plant in Bengaluru..
Apple, which sold over 50 million iPhones in the March quarter, down 1
percent year-on-year, is looking for new markets as its sales in China
have weakened.
Among a set of tax concessions, Apple had initially sought a 15-years
tax holiday for all components that it would import for setting up a
manufacturing facility in India.
A panel of ministries rejected that demand and has offered a phased
program to increase the share of local production in the manufacturing,
Aruna Sundararajan, Secretary at the Ministry of Electronics and IT
said.
"We have offered them tax exemptions on those components which could not
be manufactured in India," Sundararajan told Reuters, adding that local
manufacturing component would have to be increased gradually.
Apple has agreed to increase local share in production over a period of
time, but there was a difference between the plans of the two sides, she
said.
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The Apple logo is seen on a computer screen in an illustration photo
taken in Bordeaux, France, February 1, 2017. REUTERS/Regis Duvignau/File
Photo
Apple was not immediately available for comment.
India wants Apple to raise value addition share in phases of 3,5,7 and
10 years as the local capacity builds up, part of Prime Minister
Narendra Modi's plans to boost manufacturing.
Industry estimates the phased manufacturing program could increase local
value addition in mobile phones manufacturing to 40-50 percent in the
next three years.
Earlier, Ravi Shankar Prasad, the federal minister for Electronics and
IT said government officials were in touch with Apple and other mobile
phone manufacturers about expanding facilities and setting up new
plants.
"It will be a little early to say that India and Apple have agreed on
the common ground," said the official, adding India was ready to work
out a roadmap to encourage manufacturing.
Industry estimates total value of mobile phones produced in India
touched near 900 billion Indian rupees ($13.90 billion) compared with
540 billion rupees in the previous year.
"We are waiting for Apple to come back," said Sundararajan.
(Additional reporting by Sankalp Phartiyal; Editing by Sherry
Jacob-Phillips/Keith Weir)
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