Apple to receive tax concession on smartphone component imports

Government of India offers tax concession to Apple for importing mobile handset components for manufacturing

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Highlights

    • Apple earns tax concession on smartphone component imports
    • Apple will have to increase local addition over a period of time

Apple seems to have succeeded in earning one of the tax concessions it has long been seeking in return for setting an iPhone plant in India. According to a report from Reuters, a top government official on Tuesday said that India has offered to allow Apple Inc to import mobile handset components for use in local manufacturing tax free.

However, the tax concessions will be subject to the condition of increasing local addition over a period of time, the report noted. A federal minister told the publication that the Cupertino tech company wants to expand its contract manufacturers facility in the southern Indian tech hub of Bengaluru, as the iPhone maker seeks a bigger share in one of the world’s biggest smartphone markets.

Notably, Apple began assembling iPhone SE units in Bengaluru last week at its Taiwanese contract manufacturer Wistron’s plant. The company originally wanted a 15-year tax ‘holiday’ for all components that it would import for setting up a manufacturing plant in India. The government intermittently put rejected this demand and instead offered an ‘open-ended’ approach 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.

As per the report, India wants Apple to raise value addition share in phases of 3,5,7 and 10 years as the local capacity build up. However, the tech giant has not yet officially accepted the deal put forward by the government.  “It will be a little early to say that India and Apple have agreed on the common ground,” an official told Reuters.

According to Reuters report, industry estimates total value of mobile phones produced in India touched around Rs. 900 billion ($13.90 billion) compared with Rs. 540 billion in the previous year.