Apple is now behaving like that spoilt brat, who is adamant on getting what he desires – by hook or by crook.
After a series of demands for establishing domestic production units, Apple has now thrown in another set of demands from the Indian Govt. And this time, some of these demands are so severe, that Govt. will have to amend laws and regulations in order to provide the same.
The curious case of Apple manufacturing its iPhones in India has now become even more curious, because Govt. is in no mood to give in to these extreme demands yet.
What Apple Desires From India
The biggest and most proficient request which came from Apple is a flat 15 year custom duty holiday, especially for them, in case they start local manufacturing. The demand for this rebate has been asked for import of iPhone kits, import of used and new capital equipment, and consumables.
The document which lists these demand from Apple state: “full duty exemption on manufacturing and repair inputs (raw materials), yield loss on inputs, components, capital equipment (including parts), and consumables for smartphone manufacturing and services/repair for a period of 15 years for both domestic and export markets”
As per an official from Commerce Ministry, in order to approve this request, they will be required to change an existing trade policy; and once changed, all other phone manufacturers like Samsung, Nokia etc can also claim it. And it will mean revenue loss for the Govt.
Besides, their demand for importing used capital goods will mean that Govt. has to change Export Promotion Capital Goods (EPCG) scheme, which currently doesn’t allow import of used capital goods or consumables for manufacturing process.
Apple Says This Is The Way They Work
Justifying their demands, Apple has plainly stated that this is the way they work, and Indian Govt. has to allow them their style, in case they wish their manufacturing units.
Explaining their rationale for duty free and unchecked import of capital goods, Apple has said in their application that their chosen manufacturing process includes allocation of resources whenever and wherever it’s required in the supply chain. Besides, as per Apple, they also shift equipment between locations, as per the need.
Some other demands from Apple include:
- No additional tax or surcharges under GST regime
- Swift processing of Apple’s Advance Pricing Agreement by Income Tax Dept.
- Custom Dept. should execute “Always Open” clearance process for faster movements
- Suspension of ‘Integrated Goods and Services Tax’ at the point of importation
Govt. is right now considering these demands, and accessing them from the point of feasibility and practicality. Once the rules change, then they can’t stop other companies from demanding the same.
And, whether it will harm Indian manufacturers, who are religiously paying the taxes and complying with all Indian rules?
Last week, Commerce and Industry Minister Nirmala Sitharaman had said, “We are discussing that.. no other mobile manufacturer has sought any extra concessions.. we have not taken any decision,”
We will keep you updated as more details come in.
Do you think that Govt. should provide additional benefits to Apple and change the rules in order to please them? Is setting up a manufacturing unit of Apple so crucial that regulations can be amended? Do let us know by commenting right here!
Here is the news we covered when it comes to Apple’s local manufacturing efforts:
Apple stores opening in India soon, says Tim Cook (July, 2016)