Apple likely to lose battle to receive tax breaks from India
January 06, 2017Apple likely to lose battle to receive tax breaks from India
Looks like Apple is continuing to face stiff
resistance from the Indian government with reference to its campaign to
receive special tax breaks in the country to manufacture iPhones in the
country.
The company is still in negotiation over pursuing manufacturing
activities as part of India’s Make In India program. The Cupertino
giant wants to open stores owned 100% by the parent company, but PM
Narendra Modi wants it to source at least a few components (30%, to be
specific) from within the country itself for the products to be sold in
the stores.
It has demanded lower import and manufacturing duties, but as far as
the recent development goes, it is evident that Apple is currently not
eligible for any. However, the Cupertino-based company wants to be
totally exempted from the local sourcing condition. Apple CEO Tim Cook
had met with PM Modi last year to discuss the same.
It was reported on December 30 that Apple, through it’s component
maker Wistron, planned to set up a manufacturing facility in Bangalore’s
industrial hub Peenya.
The argument, as put forth by Trade Minister Nirmala Sitharaman, is
quite simple: if India were to agree to any concessions, they would
likely apply to all smartphone manufacturers, and not just Apple. That
is, other smartphone and technology makers would naturally question the
government as to why only Apple receives special ‘benefits.’ This would
act completely against the government’s efforts to increase
manufacturing and provide a level playing ground for all players in the
industry, especially the homegrown brands like Micromax.
Apple’s request to import and sell refurbished mobile phones in the market has been refused by the government.
Apple is betting big on the India market, where it currently holds a
minuscule 2% market share, what with slowing growth numbers in the
developed markets like US and China.
This is not Apple’s first negotiation for tax breaks with a
government, and the company itself is infamous for it’s tax evasion
strategies. Back in August last year, the company was found to be the
recipient of illegal tax breaks amounting to a sizeable sum and had been
ordered to pay back $14.5 billion by the EU commission. At the same
time, we might as well mention that the Foxconn plant in Zhengzou, China
with ‘hidden’ tax perks for the iPhone maker.
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