As part of its preconditions to make in India, US tech giant Apple has told the government it wants to use its manufacturing unit here (when it has one) to also export “certified pre-owned iPhones”, apart from making new devices, a senior government official told FE. The environment ministry is considering the proposal, he said.
The suggestion by the company comes after an earlier proposal, seeking permission to sell “certified pre-owned” (or more commonly, refurbished) iPhones in India, was rejected by the ministries of environment and industry. While Apple maintains that the sale of its pre-owned phones is prevalent in many countries, including the US, the ministries of environment as well as industry apprehend any such move could make India a dumping ground of second-hand phones and pose environmental risks.
“Now that they propose to export such ‘pre-owned phones’ (and not sell them in the domestic market), it is being considered afresh,” said the official.
Apple officials are learnt to have told the government that the process of servicing or upgrading the pre-owned iPhones in a manufacturing unit and their subsequent sale don’t involve any environmental risks. They have said every iPhone that passes the certified pre-owned programme of Apple gets a new IMEI (International Mobile Equipment Identity) number, which is basically a new signature for identification on cellular networks. An independent, third party monitors if all the proper, laid-down processes have been followed at the manufacturing facility in such cases. Usually, these certified pre-owned devices also offer the same warranty and commitment given for new iPhones.
Separately, Apple has also been in talks with the Karnataka government, exploring options for setting up a facility there. In fact, on February 2, the state government announced “Apple’s intentions to manufacture in Bengaluru”. According to earlier media reports, Wistron, a Taiwanese company and an original equipment manufacturer of Apple, could manufacture iPhones out of its facility in Bengaluru.
In a communication to the Indian government last year, the company reportedly sought several other sops–including a 15-year customs duty holiday on imports of iPhone kits, new and used capital equipment, and consumables — to set up a manufacturing unit. It has sought duty cuts on components–completely knocked down (CKD) and semi knocked down (SKD) units of iPhones — for re-assembly at the finished goods manufacturing line. It has also sought a relaxation of the 30% local sourcing requirement under the foreign direct investment (FDI) rules.
In a presentation to an inter-ministerial panel on January 25, the company executives are learnt to have explained why they need certain sops to be able to set up a unit here.
The departments of electronics and information technology, and revenue are in the process of finalising their feed-backs on a majority of Apple’s demands that fall within their respective domain.
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Apple has turned to India, the world’s fastest-growing smart phone market, to reverse slowing global sales, according to analysts. Also, with cost of production in China rising due to soaring wages, among others, the company is perhaps looking at diversifying its manufacturing base out of China, they said. The company doesn’t make its own products; rather it does it through contract manufacturers, including Foxconn and Pegatron. So, if Apple sets up a base here, the contract manufacturers may also establish units here to cater for the tech major’s demands, they said.
Currently, Apple sells its products in India through a network of local distributors and retailers. Most of the company’s items are assembled in China, usually by Foxconn Technology.