1. Narendra Modi continuing with Sonia Gandhi policy on Apple Inc makes little sense

Narendra Modi continuing with Sonia Gandhi policy on Apple Inc makes little sense

If political leadership of PM Narendra Modi and FM Arun Jaitley is going to let the bureaucratic process take over, chances are this will only discourage Apple from taking a bitter bite of what India has to offer.

By: | New Delhi | Updated: May 27, 2016 2:16 PM
Apple, Apple iphone, Apple India, Tim Cook, Tim Cook India, Narendra Modi, Sonia Gandhi, modi sonia, modi news, modi latest news Developing local sourcing is critical, but can take decades to develop quality suppliers, especially for firms that, like Apple, have very high standards for quality.

Continuity in policy is a great thing, except when the policy itself is mindless. While not being able to get it changed in Parliament is the reason why the NDA has persisted with the UPA’s disastrous land acquisition law, this cannot be the reason for staying with the UPA’s FDI in single-brand retail policy which allows majority control to foreign firms only if they agree to a 30% local-sourcing clause. Despite seeming to make a break from it by talking of carving out an exception for hi-tech industries, the government is back to insisting it will allow Apple to set up its own stores only if it does 30% local sourcing. Senior BJP leaders have defended the policy privately on grounds it leads to local employment. It would, however, be interesting to know just what the government thinks Apple can source locally given the quality and/or pricing of most Indian manufactures versus those from a China or a Vietnam. Developing local sourcing is critical, but can take decades to develop quality suppliers, especially for firms that, like Apple, have very high standards for quality. Suzuki, it is true, offers a product that is largely indigenized, but that is after three decades of being in India – imagine the consequences if India had turned it away on local-sourcing grounds. In the case of the telecom sector, where the government routinely lays down village-phone norms, it has been the growth of the rural market that has encouraged telcos to penetrate these markets, not the targets themselves – indeed, till the market developed, telcos were content to simply pay fines for not achieving targets or simply doing technical rollouts.

And though it is not a quid pro quo, surely Apple planning to set up a 4,000-strong centre in Hyderabad is employment being generated, and pretty high-quality employment at that? Indeed, even if Apple does not end up doing more sourcing for its company-owned stores, once it starts working in India via its Hyderabad centre, chances are that like other tech MNCs, it too will employ a lot more people over a period of time. If, on the other hand, the political leadership of prime minister Narendra Modi and finance minister Arun Jaitley is going to let the bureaucratic process take over, chances are this will only discourage Apple from taking a bitter bite of what India has to offer. A good way to look at how mindless the UPA’s policy was is to examine what happens now that Apple has been denied permission to set up shop here. Apple phones will continue to be sold through franchisees and distributors, though those buying the phones will probably not get top quality after sales services and/or full product guarantees/warranties. If consumers don’t find this good enough, they’ll dump Apple products and go in for Chinese imports. While neither process is adding to local sourcing in any way, if the finance minister was to use countervailing duties as imaginatively as he did for mobile phones two years ago and extend this to printed circuit boards used in the manufacture of phones, there would be more local value addition and jobs. It is unfortunate that a government which came to power on the promise of being different should choose to follow UPA policies that make little sense. Because-Sonia-said-so can hardly be the justification for a policy.

  1. b
    blogger3110
    May 27, 2016 at 8:03 pm
    Apple can make a start by outsourcing in India,why should it be given everything on a platter.That Modi continues some UPA policies shows he is a statesman and does not work on any anti UPA bias
    Reply
    1. R
      romi
      May 27, 2016 at 9:59 am
      sonia policy is what ?? corruption & running nation thru proxy puppet PM the writer just wants to give importance to sonia & is under apple payroll its question of time before Apple comes starts manufacturing in india have patience just dont get excited Its apple that need indians to buy their phones not the other way
      Reply

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