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India rejects Apple’s request for tax breaks

Apple’s request for receive tax incentives for manufacturing in India has been denied by the country’s Department of Revenue.

The US-based vendor had asked for a specific set of exemptions before it began manufacturing devices in India. These included being exempt from India’s 30% local sourcing requirement and waiving custom duties on imports of device components and equipment for fifteen years.

It was reported in February that Apple had reached an agreement with contracted manufacturing firm Wistron which would see the latter firm establish a Bangalore-based plant exclusively for assembling iPhones. Production of the lower-cost 4-inch SE model was scheduled to begin at the end of April - reportedly regardless of whether the government had approved Apple’s requested tax breaks.

With the Bangalore facility pitched as a trial initiative for Apple, the Department of Revenue’s decision could derail Apple and Wistron’s plans. While Indian officials had previously confirmed that they had no intention of conceding to Apple’s demands for tax breaks, it is believed that the firm’s entire Indian manufacturing project hinged on receiving concessions from the government.

One potential hope for Apple is the fact that the Indian government is in the process of updating its policy towards all manufacturing in order to promote the “Make in India” initiative and thereby draw in foreign investment. The Finance Ministry has confirmed that while individual companies would not receive tax breaks, incentives could be provided to the entire tech sector.

Apple has shown active interest in Indian manufacturing since late 2016 when it began holding talks with the government on the matter. Apple products are sold via distributors in India as the vendor has no branded retail outlets in the market.

India is the second largest smartphone market globally following China, although while smartphone growth is dwindling in the latter, it is surging in India, with 2.5 million devices shipped last year. The fourth quarter accounted for a third of this total.

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