Daily Management Review

Tax Concessions Offered To Apple By India To Expand Production: Reuters


Tax Concessions Offered To Apple By India To Expand Production: Reuters
To better allow the import mobile handset components intended for use in local manufacturing tax free, the Indian government has offered to allow Apple Inc certain concession, reported the news agency Reuters quoting a top government official.
Increasing of the local value addition over a period of time would be the primary condition for the tax concessions, the Reuters report said.
And as the iPhone maker seeks a bigger share in one of the world's biggest smartphone markets, Apple Inc wants to expand its contract manufacturer's facility in the southern Indian tech hub of Bengaluru, a federal minister said on Tuesday.
iPhone SE at its Taiwanese contract manufacturer Wistron's plant in Bengaluru have begun to be manufactured last week by the Cupertino, California-based Apple.
Apple is looking for new markets as its sales in China have weakened and the company has sold over 50 million iPhones in the March quarter which is 1 percent lower when compared to figures year-on-year.
A 15-years tax holiday for all components that it would import for setting up a manufacturing facility in India is among the main tax concessions that have been sought by Apple among a set of tax concessions.
Aruna Sundararajan, Secretary at the Ministry of Electronics and IT said that the Indian government has offered a phased program to increase the share of local production in the manufacturing, after a panel of ministries had rejected the tax concession demand from Apple.
"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.
She said however that there was a difference between the plans of the two sides even though Apple has agreed to increase local share in production over a period of time.
Apple was not immediately available for comment.
As a part of Prime Minister Narendra Modi's plans to boost manufacturing, as the local capacity builds up, the Indian government wants Apple to raise value addition share in phases of 3,5,7 and 10 year.
In n the next three years, the phased manufacturing program could increase local value addition in mobile phones manufacturing to 40-50 percent, industry estimates.
Government officials were in touch with Apple and other mobile phone manufacturers about expanding facilities and setting up new plants, Ravi Shankar Prasad, the federal minister for Electronics and IT had said earlier.
"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.
Compared with 540 billion rupees in the previous year, the total value of mobile phones produced in India touched near 900 billion Indian rupees ($13.90 billion), industry estimates.
"We are waiting for Apple to come back," said Sundararajan

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