If India’s ambitious ‘Make in India’ program has to succeed, then Apple has a suggestion – lower tariffs and will ship a large number of iPhones out of India. Financial Express in its news carried this report saying India already is a home for major Apple contract manufacturers like Foxconn, Pegatron, Wistron among others.
You must be aware that Apple has through contract manufacturers Foxconn and Wistron in recent times started shipping to Europe their iPhone 6s and iPhone 7 from Bengaluru facilities. iPhone mobile kits and components are sourced from various Apple OEMs and Tier I/II suppliers located in China, South Korea, and Taiwan. Post assembling, they are packed and exported, besides catering to domestic Indian markets.
Apple Seeks Lower Import Tax Rates to Invite More iPhone Contractors to India
India is labeled as ‘next’ potential manufacturing destination for companies like Apple as it grapples issues faced as fall out of the US-China trade spat. Apple has stepped up its efforts to seek alternative sources for manufacturing either critical components or fully made iPhones.
In this process, countries like Vietnam, India, and many others will help it reduce Apple’s dependence on China. Besides, lower production costs due to the inherent advantages offered by each country would prop the bottom lines for the company.
India can offer the right ecosystem for companies like Apple, which can find talent, infrastructure, and large captive consumption to satisfy its corporate aspirations. It can also cater to a growing appetite of Indian consumers.
The report citing Apple sources said that the Indian Government must offer special concessions in terms of imports of critical components as they currently pay as high as 43.68% in tax. Whereas in Vietnam, the preferential tax rates of 10% for 15 years or 17% for ten years, compared with the regular rate of 20% needs to be paid, said the report citing exporters.
Even President Trump has sought ‘trimming or scrap’ of the high 20% tariff in electronics and other sectors for which India did not respond yet. During his meeting with Prime Minister Narendra Modi this year, the US President had criticized India’s high import tariff on the iconic Harley Davidson motorcycles as ‘unacceptable.’
‘Make in India’ program an ambitious dream of Indian Prime Minister Narendra Modi; Apple has a way out to make it successful. It has suggested lowering tariffs to be the significant roadblock in attracting its other suppliers and components manufacturers of its famed iPhones to India. One major irritant that Government of India removed in the recent Budget was the relaxation of the 30% local sourcing rule which Apple could never agree.
Apple Says More Lower Tariff and Will Help ‘Make in India’ Program to Succeed
Local companies are being offered export incentives under the MEIS and other export promotion schemes. However, these are redundant for companies like Apple, which seek better incentives in the form of lower import duties and facilitation in exports. This, in turn, will help boost India’s image as a major manufacturing hub and provide much-needed impetus ‘Make in India’ program to succeed.
So, if India needs to be the next big production hub for Apple iPhones, it needs to lower tariffs and encourage overseas companies to set shop. Is anyone listening and are you, readers, too?