As a team of officials from US tech giant Apple comes calling this week to meet senior bureaucrats and is likely to pitch for various incentives to set up a unit in India, some government officials believe any policy on additional concessions to foreign companies needs to be contingent on potential local sourcing and value addition.
“Since there is a strong co-relation between value-addition and job creation, value-addition remains a priority for us. The Make-in-India programme would suffer if every foreign player starts to demand concessions without actually doing much of value addition here,” said an official source. As such, the current FDI rules provide for a relaxed policy on local sourcing for entities having “cutting-edge technology”. (Such entities get a waiver from the mandatory 30% local sourcing rule for the initial three years and a “relaxed sourcing regime for another five years” if the FDI level is above 51%.)
Apple has sent a list of demands to the government — including a reported 15-year customs duty holiday on iPhone kit imports and favourable local sourcing policy — as necessary pre-conditions to start manufacturing in India.
Asked if the government intends to offer the special incentives sought by Apple, the official said: “Our policies are not specific to any company. Whenever they are changed, we will ensure all those who meet the specified criteria get the sops.”
Apple officials are scheduled to meet senior officials from various ministries on Wednesday. Stating the intent of the government clearly, communications & information technology minister Ravi Shankar Prasad last week said the Centre would consider Apple’s request for various incentives with an “open mind” and it would “very much like” it to set up its base in India.
Apple wants a 15-year customs duty holiday on import of iPhone kits, new and used capital equipment, and consumables to establish an iPhone production facility in India, among other incentives, The Indian Express has reported. Apple’s “desired model for entry” shows that it does not intend to source locally, as 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 to be set up in spring this year, according to the report.
Apple’s earlier demand to change labelling norms so that its products can retain aesthetic sense is already under consideration. However, another demand for an approval to sell refurbished iPhones in India has faced resistance from the ministries of industry as well as environment.
In a communication to the “highest level” of the government, Apple has also conveyed its desire for a favourable eco-system and taxation regime.