India promises Apple tax-free iPhone parts imports in exchange for expanded manufacturing

India is reportedly willing to waive taxes on imported iPhone parts in exchange for the company helping to expand Wistron's manufacturing operations in Bengaluru, where the iPhone SE is currently being made.

As a condition of the favor, Apple will have to gradualy increase its use of locally-produced parts, Reuters said on Tuesday. Specifically, the Indian government has offered a phased program with intervals at three, five, seven, and 10 years.

Apple is said to have agreed to boost production over time — but Aruna Sundararajan, Secretary at the Ministry of Electronics and IT, claimed that there were still differences in Apple's plans.

Industry estimates suggest that the government's phased program could boost local value addition to 40 to 50 percent in the first three years. Local manufacturing is a must-have for the government in light of Prime Minister Narendra Modi's "Make in India" program.

Indian iPhone SE production began earlier this month, following months of negotiations and preparations.

For Apple there are two potential benefits to Indian iPhone production, the first being price competition. Imported iPhones are priced well out of the range of most Indians, and indeed the average smartphone price in the country is $150 — less than half of what an iPhone SE costs in the U.S. Government officials have hoped that building the SE in India could lower its price there by as much as $100.

It should also help Apple meet local-sourcing requirements before setting up first-party retail stores in the country. Until now the company has produced very little in India, preferring instead to use Chinese/Taiwanese manufacturers.

15 Comments

rob53 14 Years · 3321 comments

About 7 years ago

This is typical in almost all countries and has been abused in the US by just about every large company (Apple included). Why does the EU feel so slighted when everyone is doing exactly what Apple has done in Europe? They provide a lot of employment in exchange for lower operating expenses. India knows this so why doesn't the EU understand.

It's always been called greasing the wheel (and other things).

[Deleted User] 12 Years · 0 comments

rob53 said:

This is typical in almost all countries and has been abused in the US by just about every large company (Apple included). Why does the EU feel so slighted when everyone is doing exactly what Apple has done in Europe? They provide a lot of employment in exchange for lower operating expenses. India knows this so why doesn't the EU understand.

It's always been called greasing the wheel (and other things).

The difference is, European law prevents (or is supposed to) any single country benefiting over others by unfair means. Countries within the EU must be as one and not compete across borders. We all signed up to this as an extension of the common market etc. In theory, it means the wealth is spread, each country benefits equally as no single country gets everyone's business by having low taxes or favorable deals. The downside is, it puts everyone within the EU at a disadvantage to those outside of it.

lkrupp 20 Years · 10521 comments

adm1 said:

rob53 said:

This is typical in almost all countries and has been abused in the US by just about every large company (Apple included). Why does the EU feel so slighted when everyone is doing exactly what Apple has done in Europe? They provide a lot of employment in exchange for lower operating expenses. India knows this so why doesn't the EU understand.

It's always been called greasing the wheel (and other things).

The difference is, European law prevents (or is supposed to) any single country benefiting over others by unfair means. Countries within the EU must be as one and not compete across borders. We all signed up to this as an extension of the common market etc. In theory, it means the wealth is spread, each country benefits equally as no single country gets everyone's business by having low taxes or favorable deals. The downside is, it puts everyone within the EU at a disadvantage to those outside of it.

The Socialist Union of Europe (aka EU). Here in the U.S. (a union of nominally sovereign states) individual states are always competing with each other to lure business and investments. Maybe Europe should try it some time instead of worrying about ‘fairness’ and ‘wealth distribution.’

3 Likes · 0 Dislikes

jdgaz 10 Years · 407 comments

Can they keep the power on long enough to produce phones?

anantksundaram 19 Years · 20391 comments

sog35 said:

Nice.

In the meantime, in the US, our resident bozos in Washington DC -- to whom we send $4 trillion every year -- are talking about imposing a border adjustment tax on transactions like these. Not that such a proposal will succeed, but it shows how stupid we are in our conversations compared to others, even developing countries.