Apple team meets Indian officials to seek tax concessions

IANS January 25, 2017

A team from Apple Inc on Wednesday met officials of the Commerce and other ministries to seek tax concessions for manufacturing and setting up its stores in India.

“We’ve been working hard to develop our operations in India and are proud to deliver the best products and services in the world to our customers here. We appreciate the constructive and open dialogue we’ve had with the government about further expanding our local operations,” an Apple India spokesperson told IANS.

Apple officials on Tuesday met Commerce Minister Nirmala Sitharaman to discuss the issues involved.

“They (Apple) are putting forth their demands and the government has to consider these. It has to take a 360-degree view, as others (foreign companies) are already here. They want some tax concessions,” a Commerce Ministry source told IANS.

“In this case, maybe, they are asking for more and let’s see how it goes.

“They (Apple) met the minister (Sitharaman) yesterday (Tuesday). Both the parties discussed the issues. Today (Wednesday) they met all the other ministry officials. Nothing is being talked about. They have a list of demands that will be shared,” the source added.

However, the ministry officials believe the whole process is still in the initial stages as of now, as there are still several stages to go and a consensus needs to be reached from all ministries involved.

“It is very rudimentary as of now. There are several stages to cover. They will meet the officials, make a presentation, tell what they want. The government has to decide what has to be given and what not. These are simple meetings going on,” a source told IANS.

“It is not DIPP (Department of Industrial Policy and Promotion) alone but several ministries in it. It all depends on how things move. There needs to be a consensus from everyone,” the source added.

Apple wants India to waive taxes and duties on imports in exchange for setting up local manufacturing units. The tech giant had, last year, applied for tax concessions and relaxation in domestic sourcing norm which were rejected by the Finance Ministry.

Last year, Apple’s demands were rejected because of the rules. But with the tweaking of the Foreign Direct Investment (FDI) rules, the US company is hoping to be lucky this time.

Apple sold 2.5 million units in India last year (with one third of its total shipment coming from fourth quarter driven by seasonality and iPhone7). Apple was 10th in the smartphone rankings during the fourth quarter of 2016 and a leader in the premium segment (above $450) where it had 62 per cent market share.

“Apple is a very important player and can have a major contribution to “Make in India” programme. Even with 2 per cent market share in India, it is the second largest brand by value in the fourth quarter of 2016,” said Tarun Pathak, Senior Analyst, Mobile Devices and Ecosystems, at New Delhi-based Counterpoint Research.

In 2016, there were several “Make in India” announcements from smartphone makers like global internet technology conglomerate LeEco, Micromax, Vivo India, Huawei and LG, among others.

Since the company is top-notch and has a marquee name in many ways, the government may possibly give some concessions and entice them to open manufacturing units in India.

But on the other side, almost 60 per cent of the smartphones are already assembled in India and none of these players have been given any special treatment.

“There is no justification to give any one player special treatment and unfair competitive advantages. If Apple gets concessions and sets up manufacturing units in India, it will put them ahead in the race making it more difficult for rivals to compete,”

Jaideep Mehta, Managing Director, International Data Corporation (IDC) South Asia, told IANS.