The government has toughened its stance against Apple’s proposal to use its facility in India to export “certified pre-owned iPhones” — one of the pre-conditions the company had set to establish a larger manufacturing base in the country. Official sources told FE that a section of the government fears allowing Apple to bring in such second-hand iPhones from all over the world to service or upgrade here for subsequent exports could pose environmental risks.
“Apple wants to refurbish iPhones in India and export them. But there are serious questions regarding the issue of e-waste. The environment ministry has reservations about the issue, so has MeitY (ministry of electronics and information technology). Until a concrete strategy is firmed up on how to deal with e-waste effectively, it’s very difficult to approve such a proposal,” said one of the sources.
What also seems to have gone against Apple is the fact that while it was quick to hand over a list of pre-conditions—from tax concessions to permission to export refurbished phones—to set up a large manufacturing unit in India, it didn’t share with the central government any details on the quantum of investment it is planning to make or specific employment opportunities it will create here. Sources had earlier told FE that the iPhone maker would set up only a “pilot project” near Bengaluru (to produce around 3-5 lakh phones), and the likelihood of a larger manufacturing unit in India hinged on the kind of concessions the central government would offer to the tech giant.
Apple had sought the government’s permission to export “certified pre-owned iPhones”, without selling them here, after its earlier proposal to sell such refurbished iPhones in India was rejected by the ministries of environment and industry on grounds it could result in India becoming a dumping ground of second-hand phones.
For its part, Apple has maintained that the sale of its “certified pre-owned phones” is widely prevalent across nations, including the US. An Apple spokesperson was approached for this story, but he hasn’t offered any comment till the time of going to press. Sources said Apple officials have told the government that the process of servicing or upgrading the pre-owned phones in a manufacturing unit and their subsequent sale don’t involve any environmental risks. They have said every i-Phone that passes the certified pre-owned programme of Apple gets a new IMEI, 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. Usually, these devices also offer the same warranty and commitment given for new iPhones.
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The hardening of stance on e-waste could force Apple to review its plans for servicing and then shipping out refurbished iPhones. Earlier this year, MeitY had also endorsed the revenue department’s stance that Apple’s demand for an import duty exemption for certain components for making i-Phones in India couldn’t be met.
MeitY secretary Aruna Sundararajan told FE that the government has shared with Apple a road map for Indianisation, aimed at driving up value addition here. It asked the company to align its plans with the government’s road map (meant for all foreign companies interested in investing in this segment) in which case no special concessions would be given to the tech giant. “So they said okay. They will examine it and get back to us,” the secretary said.
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.
–Rishi Ranjan Kala and Banikinkar Pattanayak