It looks like Apple might manage to get the tax sops it wanted in India, or at least most part of it. As per a Reuters report, India has offered to allow Apple to import mobile handset components intended for use in local manufacturing tax free.
However, the tax concessions will be given under the condition that Apple increases local value addition over a period of time.
In a big to seek a larger pie of one of the world’s largest smartphone markets, Apple wants to expand its contract manufacturer’s facility in Bengaluru, a government official told Reuters.
Earlier in May, Apple began assembling iPhone SE in Bengaluru at its Taiwanese contract manufacturer Wistron's plant.
Initially, it had sought a 15-year tax holiday for all components that it would import for setting up a manufacturing facility in India. But this demand was rejected by the government, which then offered a phased program to increase the share of local production in the manufacturing, Aruna Sundararajan, Secretary at the Ministry of Electronics and IT told Reuters.
"We have offered them tax exemptions on those components which could not be manufactured in India," Sundararajan told Reuters, adding that local manufacturing component would have to be increased gradually.
India wants Apple to raise value addition share in phases of three, five, seven and 10 years as the local capacity builds up, part of Prime Minister Narendra Modi's plans to boost manufacturing.
But while Apple has agreed to increase local share in production over a period of time, there was a difference between the plans of the two sides, Aruna said.
"It will be a little early to say that India and Apple have agreed on the common ground," said the official, adding India was ready to work out a roadmap to encourage manufacturing as it waits for Apple to get back.
As per the Reuters report, industry estimates total value of mobile phones produced in India touched near Rs 900 billion ($13.90 billion) compared with Rs 540 billion in the previous year.