New Year May Dash Apple's Dream to Make IPhone in India

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Iphone - Sputnik International
Despite making desperate moves to set up an assembly line in India, the US based smartphone manufacturer Apple is unlikely to receive a positive response on the incentives sought from the Indian government.

New Delhi (Sputnik) — Apple has sought tax incentives and relief from product labeling law from the Indian government to enter into local manufacturing of its iconic iphones. A group of senior officials from various ministries will meet in New Delhi in first week of January to consider the request made by Apple. However, India’s Ministry of Finance is not very keen to provide tax relief to Apple as it suspects that several other manufacturers, mainly Chinese, might ask for similar benefit.

“Several companies in India are manufacturing mobile phones in India. Nobody is asking for additional incentives. Currently, the government provides sufficient support to boost electronic manufacturing,” a senior official told the news agency PTI.

The Indian government has receiveda massive response in the electronic manufacturing sector in the last 18 months or so. According to the Ministry of Electronics and Information technology, 40 manufacturing units have been set up in India during this period. These include five units of global leading player Foxconn, four units of Intex, two unit of Lava and several other Chinese companies having one unit each. It is estimated that 220 million mobile phones have been sold in India in 2015-16 alone out of these; 110 million had some form of manufacturing in Indian locations.

“Ease of doing business and a stable fiscal regime which the GST will bring to the forefront are likely to make India an overall attractive place for manufacturing. The early momentum that we have achieved actually needs to be sustained and further accelerated,” Aruna Sundararajan, top  bureaucrat of the Ministry of Electronics and Information technology said.

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A recent study conducted jointly by India’s premier management institute IIM Bangalore and Counterpoint Researchers highlighted that the value addition in India is approximately 6% under the current state of manufacturing in India. This can be increased up to 32% by 2020 wherein the most of the manufacturing processes in India.

The Indian government already provides financial incentives and subsidy to companies locally assembling smartphones. Apple has sought additional benefits  as it claimed that it is proposing to manufacture a state of the art product that cannot be outsourced from Indian vendors. This claim was rejected by Indian Finance Ministry in May this year. The government had also turned down a proposal made by Apple to import second hand IPhones and sell them in India.

India is one of Apple’s top revenue generation and growth markets  despite the high price of its phones. The penetration of the high speed mobile internet network is expected to further boost the growth prospect of Apple which has already  seen 50% growth this year.

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