Apple Inc. Seeking ‘Incentives’ To Make iPhones In India

Apple Inc AAPL

Apple is seeking incentives from the government of India to lower its financial burden of setting up a new plant, reports the India Times. India offers financial incentives to large corporations to invest in local electronics manufacturing, and the U.S. firm is looking to take advantage of this. The Indian governing body handling the application says that “due diligence” is underway.

Apple desperate to make it big in India

The tech giant has tried to sell iPhones in India in several ways. Earlier this year, the Silicon Valley giant attempted to arrange a special exception to the 30% local manufacturing rule, claiming that iPhones and iPads are too technologically advanced for local sourcing to be possible. However, this request was rejected, notes 9to5Mac.

The tech giant also tried to get the permission of the Indian government to resell used iPhones in the country. This would have allowed the U.S. firm to enter the Indian smartphone market at lower price points, but the government blocked and denied this request as well. The country saw the attempt as a fast way to dump rejected iPhones in India. At this point, the iPhone maker is resorting to selling limited quantities of iPhones with the help of Indian resellers, severely limiting the market potential, notes 9to5Mac.

Apple’s products are currently manufactured in six countries, including the U.S., Japan and Korea. The iPhone making giant sells its devices through owned retail stores in Germany, China, the U.K., France and the U.S., among others. But in India, it sells its devices through distributors like Ingram Micro and Redington.

Local manufacturing a big advantage for Apple

Rumors of Apple and Foxconn partnering for an Indian manufacturing plant have been swirling for a long time. Local manufacturing may help margins in a market where prices are key. In addition, manufacturing locally will let the tech giant comply with the 30% domestic components rule. In India, the average cost of a smartphone is $150 — far cheaper than the newest iPhones.

An official told PTI that the Silicon Valley giant had asked the government for incentives related to the DeITY (Department of Revenue and Department of Electronics and Information Technology) in its communication with the government.

An Apple official said, “The Department of Industrial Policy and Promotion (DIPP) will write to both the departments regarding this communication for their views.”

The government presently gives benefits under the Modified Special Incentive Package Scheme to boost electronic manufacturing in the country. The scheme provides financial incentives to attract investments in the electronics hardware segment and offset disability.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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