Govt asks Apple to review demands for setting manufacturing unit in India

The government is not inclined to agree to the exemptions sought by Apple to set up its manufacturing plant in India as it would lead to other companies demanding similar exemptions under the ‘Make in India’ programme.

The Financial Express reported that the Prime Minister's Office (PMO) has asked the company to come up with a practical strategy which aligns with the existing scheme that promotes domestic manufacturing of electronics and to review the list of prerequisites that the company has sought to set up a proper manufacturing plant in the country.

Apple, the maker of the iPhone and most valuable company by market capitalisation in the world, is looking to diversify its manufacturing base owing to rising wages in China and looking at India as the next big opportunity amid a slowdown in sales in US and China.

The company is looking to expand sales in India which is the fastest growing smartphone market in the world and looking to cut costs by setting up a local manufacturing plant.

Apple wants relaxation in 30 percent local sourcing norms and exemption on customs duty on imports of components and equipment for 15 years.

The company in January said that it was ready with a blueprint to begin full-fledged manufacturing the iPhone in India, but wants fiscal concessions, including customs duty waiver on import of components.

In May this year, Apple started limited production of iPhone SE from Bengaluru facility for domestic customers.

The government is also wary of the environmental risks that may come from service or upgrade of second-hand iPhones brought from across the globe.

Apple setting up any large manufacturing facility in the country would depend upon the concession the government may offer. The company outsources manufacturing of iPhones to partners like Foxconn and Pegatron who may also establish bases in India to cater to the tech giant.