For months, tech-giant Apple has been seeking ways to enter the Indian market while upholding 'business facets' - minimum risk and maximum profit. However, if Tim Cook thought he would have it easy with India, he's probably mistaken - Indians are admirably better at setting terms and conditions of a bargain than most others.
Last month, Apple announced plans to make iPhones for the Indian market in Bengaluru in association with Wistron, a Taiwanese OEM manufacturer for Apple and will start production by April 2017.
According to reports published in The Business Standard, Foxconn, the biggest contract manufacturer for Apple has also been roped in to set up a manufacturing unit in India.
Apple wants to replicate its China success in India - But it has conditions that the government needs to look into.
What Apple wants from the government
1. 15-year custom duty exemption
According to a report published in The Indian Express, Apple has sought 15-year Customs duty exemption on manufacturing and repair inputs (raw materials), yield loss on inputs, components, capital equipment (including parts), and consumables for smartphone manufacturing and services/repair for domestic and export markets.
2. Concessions like relaxation in labelling rules
The iPhone maker has requested for concessions like relaxation in labelling rules, so that it doesn’t have to print product info on its devices, and tax incentives in return for setting up a manufacturing unit in the country.
3. Used smartphones to assemble locally
Apple has proposed to bring used smartphones and assemble them locally. The government has rejected this. Nevertheless, it got local sourcing norms relaxed from the Department of Industrial Policy & Promotion to open its stores in the country.
The list of prerequisites demanded by Apple for setting up iPhone facility in India will be reviewed and discussed with senior officials from ministries, including IT and finance, on January 25. Officials from departments of commerce, industrial policy and promotion (DIPP), revenue, environment and forest, electronics and information technology (DeITY) will take part in the deliberations.
What does the government have to say about this?
Government sources said the technology major should set up the manufacturing unit in India without seeking additional support. As many as 42 companies are making mobile phones in India, including Chinese firm Huawei and Xiaomi, and no firm has approached the government for any additional incentives.
"We are discussing that ... no other mobile manufacturer has sought any extra concessions ... we have not taken any decision," Commerce and Industry Minister Nirmala Sitharaman told reporters here when asked about the government's view on the issue regarding the iPhone maker.
She added: "I am not saying that we have said yes, I am not saying that we have said no.”
Earlier, the finance ministry in May had rejected relaxing the 30 per cent domestic sourcing norms as sought by the iPhone and iPad maker as a pre-condition of bringing in FDI to set up single-brand retail stores in the country.
Commerce Ministry officials said the demanded duty break would require a trade policy change for the entire industry as it would need to be extended to other companies, including Samsung, who have set up phone manufacturing units in India.
Apple's entry into India will give a major boost to Prime Minister Narendra Modi's ambitious project, Make in India, however, the government has to look at both sides - benefits that India would get out of Apple and the possible demands that may follow from over 42 other tech companies.
Till date, Apple sells iPhones and other Apple gadgets through its licensed re-sellers and distributors in the country. It is betting big on the India market, where it currently holds a minuscule 2 per cent market share.