Early this year, World’s largest tech company, Apple, had demanded an avalanche of goodies from Indian Govt., for establishing a manufacturing base in India. Some of the demands included 15 years custom holiday, ‘Always Open’ customs clearance and more.
In February, when Apple announced that they will start assembling their iPhones in India by April, speculations were rife that Govt. of India has to bend their rules, and allowed unprecedented concessions and tax breaks to Apple. Other phone manufacturers were biting their fingers because approval of such huge concessions and tax rebates was seen as partiality towards one particular company.
But, this is not the case anymore. As per confirmed reports coming in, Govt. of India has rejected most of the demands put forth by Apple.
But, Apple has not yet given up, and high-level discussions are currently on between them and Govt. of India.
Govt. Of India To Apple On Tax Breaks: A Big No!
Amidst Lok Sabha discussions, Commerce and Industry Minister Nirmala Sitharaman was asked about the curious case of Apple’s manufacturing unit in India, and their demand for tax breaks and other concessions.
In reply, she said: “Apple India has sought concessions, including duty exemptions on manufacturing and repair units, components, capital equipment including parts and consumables for smartphone manufacturing and service/repair for a period of 15 years..”
The next question was the most important, as she was asked whether Govt. of India has accepted these demands. In reply, she said clearly: “No”.
The Minister’s answers make it clear that Govt. of India is under no mood to bend their rules for a particular company.
Besides, GST regime makes the whole process, even more, simpler, and there is in fact, no need for giving special status to one company because it can create an imbalance in the whole sector.
Revenue Secretary Hasmukh Adhia has clearly stated: “There is no way we can give individual exemptions under the GST regime,”
Apple Has Not Yet Given Up
As per reliance sources, it has been revealed that Apple has sent their most senior executives to the Commerce Ministry, and high-level talks are currently on between them to negotiate on the demands.
Apple’s vice president of operations Priya Balasubramaniam has already met Hasmukh Adhia yesterday, and today (March 23, 2017), further meetings are planned between Apple executives and senior Govt. officials.
Apple is right now striving hard to open up a manufacturing base in India for a very simple reason: They want to capture world’s fastest growing electronics gadgets market, and this is the peak time.
Worldwide, Apple is bleeding red, as they posted their first ever loss in last 15 years; but sales in India increased by 50% in the same period.
This clearly proves that India along with China are the two markets which Apple desperately wants to dominate, and establishing a local manufacturing hub will help them to bring down the cost, and to create a favourable local impact, which will take their brand closer to Indians.
We will keep you updated as we receive more news on this ongoing tussle between Apple and Govt. of India.
Decline in profits is not reporting loss