Senior executives of iPhone maker Apple made a fresh pitch before an inter-ministerial panel on Wednesday for certain incentives, fiscal and otherwise, as the American tech giant is learnt to have displayed a greater level of interest in setting up a manufacturing unit in India.
In a presentation to the panel — chaired by department of industrial policy and promotion secretary Ramesh Abhishek and comprising senior officials of the ministries of electronics and information technology, finance, commerce and environment — the company’s executives are learnt to have showcased what they do elsewhere, and explained why they need certain sops to be able to set up a unit here.
In a reply to FE, an Apple spokesperson said: “We’ve been working hard to develop our operations in India and are proud to deliver the best products and services in the world to our customers here. We appreciate the constructive and open dialogue we have had with the government about further expanding our local operations.”
In a communication with the “highest level” of the government, the company has sought sops, including a 15-year customs duty holiday on imports of certain components and equipment and a relaxation of the 30% local sourcing requirement under the foreign direct investment (FDI) rules.
“No decision has been taken yet. Various departments, including the department of electronics and information technology, are considering the company’s proposal and they will submit their inputs. A decision will be made in due course,” said a source after Wednesday’s meeting.
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Last evening, Apple executives, including its global vice-president (iPhone operations) Priya Balasubramaniam, had met commerce and industry minister Nirmala Sitharaman.
Apple has turned to India, the world’s fastest-growing smartphone 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.
The recent meetings of its senior executives with key Indian government functionaries and ministers suggest the company’s seriousness in starting a manufacturing unit here, the analysts 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. The average value addition in the assembling of mobile handsets in India by foreign players is less than 10%, although in a very few cases, it goes up to 30%.
Earlier this month, Karnataka industry minister RV Deshpande said the state government has held preliminary discussions with Apple executives on setting up of their new facility in and around Bengaluru.
To boost electronic manufacturing, the government already offers capital subsidy of 20% to units in special economic zones and 25% to those outside SEZs, among others, under the Modified Special Incentive Package Scheme of the ministry of electronics and IT. The benefits are available to both new projects as well as the expansion of old units.
Stating the intent of the Centre clearly, communications and information technology minister Ravi Shankar Prasad last week said that the government 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.