Apple is now looking into the ‘parts manufacturing’ sources, wherein it targets India. They have already got approval to setup a plant in Bengaluru for assembling devices. The company has proposed to open manufacturing unit for the phone’s parts and the government of India had offered to allow Apple Inc to do so for the said reasons.
In other words, Apple is allowed to import the components from India under tax concessions; provided there is an increase in local value addition over a period of time.
Bengaluru, India’s Tech Hub, is the choice of Apple, where it wants to expand its contract manufacturer’s facility, said Mr. Ravi Shankar Prasad, the Union Minister for IT and Electronics, on Tuesday. The affirmative given by him on this is that Apple is seeking a bigger share in one of the biggest smartphone market.
A top government official said that Apple is allowed to import the components of mobile handsets for being used in local manufacturing – tax-free.
California-based Apple, Cupertino, started manufacturing iPhone SE in the plant of its Taiwanese contract manufacturer, the Wistron’s Plant, in Bengaluru.
It seems like; Apple is looking for new markets especially after the downtrend of sales in China. Apparently, Apple sold over fifty million iPhones (50 million) in the first quarter of 2017, after which it went down one percent year on year. The above reason looks to be adequate for the company’s look out for new markets.
Apple had asked for a fifteen year (15 years) tax holiday from the Indian Government, for all the imported components, for setting up a manufacturing facility in the country. The proposal was rejected by the panel of ministries, however, they in turn offered to the company to increase the share of local production in the manufacturing – Aruna Sundararajan, Secretary at Ministry of Electronics and IT.
Sundararajan also reiterated “We have offered them tax exemptions on those components which could not be manufactured in India.” The secretary also added that the local manufacturing component would have to be eventually increased.
The raising of ‘value addition’ by Apple has to be done by the company in phases of three, five, seven and ten years in India. The phases of the manufacturing programme are supposed to increase the local value addition in mobile phones manufacturing to a range of forty (40%) to fifty (50%) percentage in the coming three years (3 years).
Mr. Ravi Shankar had said sometime earlier, that the government officials are in contact with the phone manufacturers so as to expand the facilities and set up new plants.
The official pointed out that “It would be early to say that India and Apple have agreed on common ground”, however; the country would very much be ready to work towards the encouragement of manufacturing, he said.
The estimation of the production of the mobile phones in India is nearly 90,000 crores ($ 13.90 billion) compared to that of the production in the previous year which ranged to fifty-four thousand crores (54,000 crores). An immense increase in this regard is basically because of the vast market India possesses in terms of the mobile phones. Maybe that’s why Apple wants to tap the Indian market.
Sundararajan said, “We are waiting for Apple to come back”.
Hopefully it would be a worthy wait for both Apple and India, still to see ahead.