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Apple to set up ‘pilot project’ near Bengaluru initially

The Karnataka government’s excessive elation over Apple Inc setting up a manufacturing base in Bengaluru to make iPhones may have been a bit premature.

Apple 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. (Reuters)

The Karnataka government’s excessive elation over Apple Inc setting up a manufacturing base in Bengaluru to make iPhones may have been a bit premature. The iPhone maker plans to set up only a “pilot project” near Bengaluru initially, and the extent of manufacturing there hinges on the kind of concessions the central government is willing to offer to the tech giant, a person familiar with the development told FE.

While Apple hasn’t divulged details of its plan, Karnataka’s minister for information technology, Priyank Kharge, last week said the company would start the assembly of iPhone 6 and iPhone7 models at a facility in Peenya on the outskirts of Bengaluru by the end of April or early May, and that its plant will be set up through its partner, Wistron Corp of Taiwan. However, Kharge didn’t provide any details of investment and manufacturing capacity of the proposed facility. He only added: “They (Apple) want to produce as much as they need to cater for the domestic market.”

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In a communication to the Indian government last year, Apple 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 also wants duty cuts on components — completely knocked down and semi-knocked down iPhone units — for re-assembly at the finished goods manufacturing line. It has also demanded relaxation of the 30% local sourcing norm under the foreign direct investment rules. In a presentation to an inter-ministerial panel on January 25, the firm’s executives are learnt to have explained why they need certain sops to be able to set up a unit here.

A senior government official said Apple seems to be serious about its India plans, but it hasn’t committed anything on investment or prospects of manufacturing and job creation to the central government yet. The Centre, too, is yet to take a final call on the demand list submitted by the company.

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