Apple's 'growing' demands for sops, tax concessions riles Modi govt

Apple has demanded concessions on tax as well as exemption from local sourcing of input materials

Apple’s India plans have hit a sticking point over concessions the company is making a pitch for. Amid reports that the California-based firm is in advanced stages of talks with the government for setting up a manufacturing facility in India, a senior commerce ministry source said on Tuesday that Apple’s “growing demand for concessions” could be a dampener. 

“Apple is apparently demanding concessions that no other company is asking for,” the source said.

While not specifying the latest demands made by the company, the source said these included its earlier demand of exemption from a local sourcing of products. The other demands include concessions on tax and the “creation of a suitable ecosystem”, the source added.

While the finance ministry is looking at the tax demand, the local sourcing norms as well as other things the firm has asked for will be examined by an inter-governmental panel comprising senior officials of the departments of industrial policy and promotion, revenue and electronics and information technology at a meeting slated to take place later this week.

According to the current foreign direct investment(FDI) norms notified by the department of industrial policy and promotion (DIPP) in June 2016, 100%  FDI is allowed in single-brand retail although foreign retailers must obtain the approval of the Foreign Investment Promotion Board (FIPB) if the FDI limit exceeds 49%.

Also, foreign entities that have “state-of-the-art” and “cutting-edge” technology will get an exemption from the annual mandatory 30%  sourcing rule for the initial three years. 

Thereafter, in the next five years, the company will have to meet the domestic sourcing norm at an annualised average rate of 30%.

While Apple had been identified as such a company, it wants an indefinite exemption from domestic sourcing, as was the case under the earlier norm, a senior DIPP official said. 

Last year, the finance ministry had rejected its proposal to set up wholly-owned outlets in the country under such conditions.

The company had earlier stated its difficulties in sourcing locally, saying it did not have any manufacturing units in India and its products had sophisticated parts not easily available.
 

It had earlier been reported that Apple had asked the government to relax its mandatory rules regarding labelling on products, saying it would go against the minimalist look of the devices.

However, while the earlier focus of negotiations was the opening of retail stores in the country, other issues had now taken hold, the source added.

Apple has also been keen on getting permission to import and sell refurbished phones in India. On this, Apple CEO Tim Cook had also visited India and met Prime Minister Narendra Modi last year.

The proposal was rejected by the environment ministry in 2015 with and telecommunications ministries also reportedly having some reservations about it.

Apple currently sells its products in India through arrangements with local retail outlets. Among the six countries where it manufactures products, most of the company’s items are assembled in China, usually by Foxconn Technology. The value of its sales in India crossed $1 billion for the first time last year, according to filings with the registrar of companies.