India might allow Apple to refurbish iPhones for export

India might allow Apple, the world's largest smartphone maker, to set up units for refurbishing its iPhones in this country, with a caveat that it exports these, not sell in the local market.

This is in the wake of overtures by Apple to sell used iPhones in India. It has sought a list of exemptions to the normal rule, including a 15-year tax holiday.  

"As long as they (Apple) are exporting, we don’t have a problem. They have asked for exports. Demands around packaging are very minor," said information technology secretary Aruna Sundararajan here on Friday.

The government's preventing Apple from selling its refurbished phones here could be a dampener for the company, looking at India as the next China. Apple saw its best sales in the quarter to December in India but has less than three per cent of the largely price-sensitive market, dominated by global rival Google.

Apple's old smartphones iPhone 5 or 5S cost around Rs 16,000 in India, much higher than the majority of smartphones that use Google's Android software and sold by companies such as Samsung or Xiaomi for less than Rs 10,000. 

The government has been wary of allowing Apple or other smartphone makers to bring in damaged products, fearing they'd use the country as a "dumping yard". Apple's strategy for refurbished phones in the local market is to help it fight entrenched Chinese entities such as Xiaomi and Indian companies such as Micromax on price and get users to upgrade on its eco-system.

Sceptics have warned that allowing Apple to refurbish phones in India could lead to dozens of global smartphone makers looking at the country to dump defective ones. Only one in five defective devices could potentially be refurbished and the rest of the components could end up as waste.

"If they allow Apple to refurbish smartphones, they might also have to allow the 200-odd smartphone brands to do the same. If everyone starts importing defective units, it will be a nightmare for the government on what comes in, goes out and what is dumped in the country," says Neil Shah, Director at Counterpoint Research, a technology researcher. "India could end up being an electronic waste dumpyard."

Separately, Apple has sought concessions which the government has said might not all be met. Apple is looking to manufacture its iPhones in the country to save on taxes and bring down the cost of its devices. The company has identified Taiwanese contract manufacturer Wistron to locate a unit in Bengaluru and assemble the previous generation iPhone SE in the city. 

So far, the company’s attempts to sway the Indian government to extend further sops for it to set up manufacturing plants has met with resistance.

Apple also has plans to open own stores in India, for which it has got a waiver of the 30 per cent local sourcing norms for single-brand retailing. The company is looking to reach a wider set of buyers by owning and controlling the buying experience of its devices in India, a tactic that worked for it in China.