India officially offer tax concessions Apple sought for production expansion

Apple have been granted some of the tax concessions the company sought to expand operations into India.

SAN FRANCISCO (Diya TV) — India have officially offered to allow Apple Computer to import mobile handset components intended for use in local manufacturing tax free, a top government official said on Tuesday.

The tax concessions, however, will be subject to the condition of increasing local value addition over a period of time.

Apple are seeking to expand its contract manufacturer’s facility in the southern Indian tech hub of Bengaluru, a federal minister said on Tuesday. The company, which manufactures the iPhone, are ultimately seeking a larger share in one of the world’s largest and most rapidly developing smartphone markets. Apple sold more than 50 million iPhones in the March quarter, down 1 percent year-on-year, are looking for newer markets as its sales in China have weakened.

The California-based company just last week started manufacturing versions of its iPhone SE at its Taiwanese contract manufacturer Wistron’s plant in Bengaluru.

Among a set of tax concessions, Apple had initially sought a 15-year tax holiday for all components that it would import for setting up a manufacturing facility in India.

An Indian panel of ministries rejected that request, instead offering a phased program to increase the share of local production in the manufacturing, Aruna Sundararajan, Secretary at the Ministry of Electronics and IT said.

“We have offered them tax exemptions on those components which could not be manufactured in India,” Sundararajan told Reuters, saying in addition that the local manufacturing of components would be required to increase gradually.

Apple have agreed to increase its local share of production over a period of time, but the two sides had a difference in opinion of scheduling in that regard, Sundararajan said. India wants Apple to raise value addition share in phases of 3, 5, 7 and 10 years as the local capacity builds up, part of Prime Minister Narendra Modi’s plans to boost manufacturing.