Apple granted tax concession for local manufacturing in India

By Karthekayan Iyer | Published on 24 May 2017

Apple's tax concession is subject to the condition of increasing local value addition over a period of time.

Apple granted tax concession for local manufacturing in India

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The Indian government has reportedly offered concession to Apple Inc. for local manufacturing of iPhones. According to Reuters, the government has offered tax concession for import of components needed to locally assemble iPhones in India.

The Wall Street Journal reported last week that Apple Inc. has completed the trial run of assembling iPhone SE at Wistron's assembly unit in Bengaluru. The report added that Apple has begun initial production of a small number of iPhone SE handsets, and the devices will hit stores this month. Ravi Shankar Prasad, the union minister for Electronics and IT, has said that Apple wants to expand its contract manufacturer's facility in Peenya.

Ahead of assembling iPhones in India, Apple had sought 15-year tax holiday on the import of components needed to start local manufacturing. The government initially rejected that demand and offered a phased programme to increase company's share of local production. The new tax concession will be subject to the condition of increasing local value addition over a period of time.

"We have offered them tax exemptions on those components which could not be manufactured in India," Aruna Sundararajan, Secretary at the Ministry of Electronics and IT told Reuters. She added that local manufacturing of components would have to be increased gradually.

Under the government's Make In India and Digital India initiatives, officials from India have been in touch with Apple and other mobile phone manufacturers to start expanding their existing facilities or start new plans. Chinese smartphone makers Xiaomi, Vivo and Gionee have started local manufacturing while Korean smartphone maker Samsung also has its own manufacturing unit in India.

Apple is reportedly starting an online store in India by the end of this year and also planning to establish its own retail stores here. The Cupertino-based smartphone maker currently enjoys a share of just 3 percent in India's growing smartphone market, and the local manufacturing may benefit the company in expanding its footprint.

Karthekayan Iyer

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