Apple has asked the Indian government to provide its suppliers with tax breaks.
Government officials have noted that implementing tax breaks for component suppliers would require a new policy that applied to all device manufacturers.
In May, the US firm began manufacturing iPhone SE devices in India, making it the second country after China where iPhones are assembled. The devices are produced at a facility in Bengaluru (Bangalore) set up by Apple’s contract manufacturer Wistron, after an agreement was reached in February to begin making lower-priced iPhones in India.
Prior to beginning production, Apple had requested a number of tax incentives, including a waiver of custom duties on importing components and equipment for fifteen years, and exemption from local sourcing requirements. The Department of Revenue rejected these demands but the firm went ahead with production regardless.
India’s government has however teased the possibility of incentives – potentially by pegging them to job creation. In June, the government asked Apple to lay out its long-term investment plans for Indian smartphone manufacturing, including an estimate of the number of jobs it would create. The government has stated that it is reviewing its manufacturing policy to encourage foreign investment and drive support for the Make in India campaign that has been spearheaded by the government of Prime Minster Narendra Modi.
Apple is bringing itself in line with the local content requirements stipulated by the Make in India campaign. The initiative aims to encourage domestic manufacturing, and has resulted in an estimated 75% of devices sold in India being assembled locally. In 2016, 2.5 million iPhones were shipped in India, with a third of these sold during Q4.
India has surpassed the US to become the world’s second largest smartphone market, after China.