Apple detailed Indian iPhone manufacturing demands to Modi in October letter

Posted:
in General Discussion edited January 2017
Shedding light on Apple's efforts to break into the burgeoning Indian smartphone market, a letter sent to Prime Minister Narendra Modi in October outlines the company's request to "make the environment attractive" for iPhone production and export.


Apple CEO Tim Cook (left) meets Indian Prime Minister Narendra Modi.


As summarized on Wednesday by Reuters, the letter contains a list of seven demands, or "pre-requisites," the company deems necessary to jumpstart iPhone manufacturing in India.

Some, like tax breaks and duty exemptions on raw materials and equipment for manufacturing, have already been reported as key to Apple's ongoing negotiations with the country's government. The newly divulged letter, however, offers a fresh look at the company's behind-the-scenes tactics and expands on prior information from secondhand sources.

For example, the duty exemption Apple seeks covers more than materials and components, but also capital equipment for 15 years for domestic and export markets.

In addition, the company wants a relaxation of regulations that currently prohibit the import of phones older than three years old. The change would allow Apple to import older iPhones, repair them at Indian facilities and export the hardware back to international customers. Repairs and continued after sales support are crucial in maintaining iPhone as a platform, Apple said.

The letter also requested the government's assistance in pushing through a request for a ruling from Indian tax authorities that would allow Apple to transfer pricing agreements between affiliates.

India's customs process was another topic, as Apple sought a loosening of strict procedures that could stand as hurdles to future manufacturing operations.

"For trusted traders inspections need to be less intrusive -- this means less boxes opened," Apple wrote, according to Reuters. "The complete process should not require more than thirty minutes."

Each of the demands outlined in Apple's letter is designed to cut through red tape that stands in the way of manufacturing iPhone in India, which itself is a hurdle to lowering hardware prices in a bid to spur local sales.

That Apple is making a serious play for India is no secret. Just today, the country's Information Technology Minister, Ravi Shankar Prasad, said his government will adopt an "open mind" when it examines Apple's requests.

Producing even a fraction of Apple's massive iPhone orders in India would be a major economic boon for the country. Further, an Apple presence would advance Modi's initiative to groom India into an investment mecca.

Whether India will adhere to Apple's demands or broker different arrangements has yet to be seen. Company executives are scheduled to meet with officials later this month to discuss conditions of setting up shop, which according to the letter involves iPhone manufacturing, Apple retail stores, pre-owned iPhone imports and local refurbishing capabilities.

Comments

  • Reply 1 of 17
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    radarthekat2old4funapple jockey
  • Reply 2 of 17
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
  • Reply 3 of 17
    gatorguygatorguy Posts: 24,390member
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    I had thought the big US techs like Google, GE, Amazon etc. were slowing backing away from transfer pricing and the PR issues that it has caused in the past couple of years. Apparently not since Apple wants to move the same tax avoidance policy to India, creating another virtually tax-free branch of the Apple tree? So much for "bring it all home" with tax repatriation legislation. 

    At some point the various economic regions are going to have to come together to work out an agreement on how huge multinationals and their tax situations should be handled. If not expect more anger from the general public about tax avoidance schemes only available to the already wealthy. 
    edited January 2017
  • Reply 4 of 17
    gatorguygatorguy Posts: 24,390member
    uroshnor said:
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
    A sample of comments from other officials involved in approving any deal with Apple:

    "We have not done this for anyone," said a senior government official whose department is one of several involved in evaluating the Apple proposal. (Note: Samsung and Xiaomi have already set up manufacturing in India) "If we do this, we must see a lot of value addition." 

    Another official involved in the review said the government should make policies for the industry, not individual companies.

    "Apple is coming here because it sees a lucrative market, this is not a favour being done to India."

    It won't come easy.
    edited January 2017
  • Reply 5 of 17
    1st1st Posts: 443member
    excellent.  All of the company should have a good legal/logistic/finance dept like this.  Lets see what Gov say.  if all the country follow the letter, it would be wonderful for MFG and Tech.  Go Apple! flex your muscle, make the world better place ;-). 
  • Reply 6 of 17
    flaneurflaneur Posts: 4,526member
    gatorguy said:
    uroshnor said:
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
    A sample of comments from other officials involved in approving any deal with Apple:

    "We have not done this for anyone," said a senior government official whose department is one of several involved in evaluating the Apple proposal. (Note: Samsung and Xiaomi have already set up manufacturing in India) "If we do this, we must see a lot of value addition." 

    Another official involved in the review said the government should make policies for the industry, not individual companies.

    "Apple is coming here because it sees a lucrative market, this is not a favour being done to India."

    It won't come easy.
    "We have not done this for anyone." — Precisely. Apple isn't anyone, it's Apple, which would have little patience with byzantine bureaucratic inefficiencies in customs or taxing. 

    I would expect Samsung and Xiaomi to be more experienced and tolerant of such business "language barriers." West vs. East, but perhaps India could benefit by streamlining for business more along Apple's MO.
  • Reply 7 of 17
    gatorguygatorguy Posts: 24,390member
    flaneur said:
    gatorguy said:
    uroshnor said:
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
    A sample of comments from other officials involved in approving any deal with Apple:

    "We have not done this for anyone," said a senior government official whose department is one of several involved in evaluating the Apple proposal. (Note: Samsung and Xiaomi have already set up manufacturing in India) "If we do this, we must see a lot of value addition." 

    Another official involved in the review said the government should make policies for the industry, not individual companies.

    "Apple is coming here because it sees a lucrative market, this is not a favour being done to India."

    It won't come easy.
    "We have not done this for anyone." — Precisely. Apple isn't anyone, it's Apple, which would have little patience with byzantine bureaucratic inefficiencies in customs or taxing. 

    I would expect Samsung and Xiaomi to be more experienced and tolerant of such business "language barriers." West vs. East, but perhaps India could benefit by streamlining for business more along Apple's MO.
    Very serious question. Why should any wealthy company receive special tax treatment unavailable to less-well-to-do people and companies, particularly when they would already do business there anyway because it's profitable to do so. 

    I truly believe the entire world economy would be better off from top to bottom if we stopped encouraging the very wealthy thru these look-the-other-way tax avoidance policies that simply allow them to "stash the cash" with other wealthy institutions or thru executive bonuses ( which also could never be spent) in able to be even more wealthy. Low-paying and mid-range jobs for the still lower and middle classes who will work to further enrich a big multinational, and maybe in some cases a select few politicians or rich business leaders. Yippee! Let's do it!
    edited January 2017
  • Reply 8 of 17
    plovellplovell Posts: 826member
    What India needs to do is establish a free-trade zone within the country. Stuff that goes in or out to international destinations is not taxed etc. Shipments from the zone to destinations with India are taxed, along with Customs inspections etc.

    This is what China has done for some industries and it's easy to see how well it has worked.
    gatorguy
  • Reply 9 of 17
    maestro64maestro64 Posts: 5,043member
    They are not going to stop open boxes inspections this is how they get things for free.
  • Reply 10 of 17
    maestro64maestro64 Posts: 5,043member
    plovell said:
    What India needs to do is establish a free-trade zone within the country. Stuff that goes in or out to international destinations is not taxed etc. Shipments from the zone to destinations with India are taxed, along with Customs inspections etc.

    This is what China has done for some industries and it's easy to see how well it has worked.

    Yeah and China requires products in free trade zones to be exported then re-imported if you want to sell in China so companies pay more for shipping then pays a tariff on the imported product. China free trade zones were set up to promote manufacturing in china for product which will head to other parts of the world not for product being sold in China. Apple is not looking to set up manufacturing in India just to export it to other parts of the world. Plus would you buy Indian made products, At lease Products made in China under the controls of US company made good products since the work force for those product are highly skilled and trained. This does not exist in India. When was the last time anyone got high quality tech support from a Indian call center.
  • Reply 11 of 17
    maestro64maestro64 Posts: 5,043member
    gatorguy said:
    flaneur said:
    gatorguy said:
    uroshnor said:
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
    A sample of comments from other officials involved in approving any deal with Apple:

    "We have not done this for anyone," said a senior government official whose department is one of several involved in evaluating the Apple proposal. (Note: Samsung and Xiaomi have already set up manufacturing in India) "If we do this, we must see a lot of value addition." 

    Another official involved in the review said the government should make policies for the industry, not individual companies.

    "Apple is coming here because it sees a lucrative market, this is not a favour being done to India."

    It won't come easy.
    "We have not done this for anyone." — Precisely. Apple isn't anyone, it's Apple, which would have little patience with byzantine bureaucratic inefficiencies in customs or taxing. 

    I would expect Samsung and Xiaomi to be more experienced and tolerant of such business "language barriers." West vs. East, but perhaps India could benefit by streamlining for business more along Apple's MO.
    Very serious question. Why should any wealthy company receive special tax treatment unavailable to less-well-to-do people and companies, particularly when they would already do business there anyway because it's profitable to do so. 

    I truly believe the entire world economy would be better off from top to bottom if we stopped encouraging the very wealthy thru these look-the-other-way tax avoidance policies that simply allow them to "stash the cash" with other wealthy institutions or thru executive bonuses ( which also could never be spent) in able to be even more wealthy. Low-paying and mid-range jobs for the still lower and middle classes who will work to further enrich a big multinational, and maybe in some cases a select few politicians or rich business leaders. Yippee! Let's do it!

    Because companies create jobs, and jobs mean people get paid, that pay is then taxed day in and day out by the government, then the people go out and buy stuff which is also taxed and the whole things goes on and on. Government rather tax lots of people over and over again verse taxes a company once. Companies and rich people have the upper hand in the negotiating since they bring money to the government which they can tax. You and I have no power, in the conversation since we do not create money the government can tax, they just see us as the recipient. The problem is very few people make money on their own doing, the majority relay on working for a company. Then you have all the politicians  who think it is their job to help people and the only way they know how to help people is to collect taxes from the people they claim to be helping and redistribute it around via services.
  • Reply 12 of 17
    plovell said:
    What India needs to do is establish a free-trade zone within the country. Stuff that goes in or out to international destinations is not taxed etc. Shipments from the zone to destinations with India are taxed, along with Customs inspections etc.

    This is what China has done for some industries and it's easy to see how well it has worked.
    There are lots of free trade zones in India. 

    Look it up.
  • Reply 13 of 17
    badmonkbadmonk Posts: 1,320member
    in response to some of the comments related to this article, Apple is consistently one of the top three (at times number one) tax payer in the US.  Apple pays much more tax than Alphabet and especially Samsung (which has a negligable tax rate).
  • Reply 14 of 17
    djsherlydjsherly Posts: 1,031member
    badmonk said:
    in response to some of the comments related to this article, Apple is consistently one of the top three (at times number one) tax payer in the US.  Apple pays much more tax than Alphabet and especially Samsung (which has a negligable tax rate).
    I'm not sure you'd find that so surprising. Apple generates the most profit. That apple pays more tax is an obvious consequence of that and in no way a clarion call for change. 

    http://fortune.com/2016/06/08/fortune-500-most-profitable-companies-2016/
  • Reply 15 of 17
    gatorguygatorguy Posts: 24,390member
    With Apple execs meeting next week with some of the Indian Government departments they will need to convince I'm sure we'll hear more about this in short order. 
  • Reply 16 of 17
    flaneurflaneur Posts: 4,526member
    gatorguy said:
    flaneur said:
    gatorguy said:
    uroshnor said:
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
    A sample of comments from other officials involved in approving any deal with Apple:

    "We have not done this for anyone," said a senior government official whose department is one of several involved in evaluating the Apple proposal. (Note: Samsung and Xiaomi have already set up manufacturing in India) "If we do this, we must see a lot of value addition." 

    Another official involved in the review said the government should make policies for the industry, not individual companies.

    "Apple is coming here because it sees a lucrative market, this is not a favour being done to India."

    It won't come easy.
    "We have not done this for anyone." — Precisely. Apple isn't anyone, it's Apple, which would have little patience with byzantine bureaucratic inefficiencies in customs or taxing. 

    I would expect Samsung and Xiaomi to be more experienced and tolerant of such business "language barriers." West vs. East, but perhaps India could benefit by streamlining for business more along Apple's MO.
    Very serious question. Why should any wealthy company receive special tax treatment unavailable to less-well-to-do people and companies, particularly when they would already do business there anyway because it's profitable to do so. 

    I truly believe the entire world economy would be better off from top to bottom if we stopped encouraging the very wealthy thru these look-the-other-way tax avoidance policies that simply allow them to "stash the cash" with other wealthy institutions or thru executive bonuses ( which also could never be spent) in able to be even more wealthy. Low-paying and mid-range jobs for the still lower and middle classes who will work to further enrich a big multinational, and maybe in some cases a select few politicians or rich business leaders. Yippee! Let's do it!
    I was referring more to the procedural streamlining that Apple is asking for, not so much the amount of taxes paid or avoided. I don't know enough to comment on the latter subject, and I get a headache just thinking about it.

    A general obsevation about global industrial culture in the 21st century, though, is appropriate in the case of India vs. Apple, or in the case of the new US administration vs. Apple, for that matter.

    I was thinking more about the nature and scope of Apple's massive just-in-time Internet-communications-enabled supply chain — more like a planetary design and manufacturing organism than a "chain." 

    Of course India has never "done this for anyone." No single company has had to operate across borders ever at the scale and speed that Apple is forced to do because of the geographical spread among the design, engineering, prototyping, manufacturing, distribution and servicing, not to mention the far-flung research and development centers that contribute back to the design initiation process in California.

    This is new, for India, for the world, for history, and especially for retrograde 20th century "thinkers" like some of those in the new US administration. Like the East India Compnay did with international trade in the 18th century via their new technologies of maritime navigation, Apple and a few other supra-nationals are in the process of disrupting the world order one more time in favor of an inevitable planetary confederation based on electronic communication and jet air travel.

    India's neurotic attachment to bureaucratic detail left over from its colonial past is as outdated as "America first," though the latter is far more dangerous.

    — End of Sunday post-neoliberal homily.
    edited January 2017
  • Reply 17 of 17
    gatorguygatorguy Posts: 24,390member
    flaneur said:
    gatorguy said:
    flaneur said:
    gatorguy said:
    uroshnor said:
    All of these sound like very basic and reasonable 'demands,' probably ones that anyone contemplating serious manufacturing of consumer electronics in India would ask for. If the Indian government can't oblige, chances are low that they'll get any significant investments in manufacturing. 
    The Indian government is notoriously bureaucratic, and whilst India has had significant foreign investment in the services area (although that is dropping away), it has frequently struggled with attracting foreign manufacturing. Indeed, companies have pulled out of major deals over the nature and extent of government demands (eg JAS39 Gripen ).

    Its not crazy that the whole thing falls through
    A sample of comments from other officials involved in approving any deal with Apple:

    "We have not done this for anyone," said a senior government official whose department is one of several involved in evaluating the Apple proposal. (Note: Samsung and Xiaomi have already set up manufacturing in India) "If we do this, we must see a lot of value addition." 

    Another official involved in the review said the government should make policies for the industry, not individual companies.

    "Apple is coming here because it sees a lucrative market, this is not a favour being done to India."

    It won't come easy.
    "We have not done this for anyone." — Precisely. Apple isn't anyone, it's Apple, which would have little patience with byzantine bureaucratic inefficiencies in customs or taxing. 

    I would expect Samsung and Xiaomi to be more experienced and tolerant of such business "language barriers." West vs. East, but perhaps India could benefit by streamlining for business more along Apple's MO.
    Very serious question. Why should any wealthy company receive special tax treatment unavailable to less-well-to-do people and companies, particularly when they would already do business there anyway because it's profitable to do so. 

    I truly believe the entire world economy would be better off from top to bottom if we stopped encouraging the very wealthy thru these look-the-other-way tax avoidance policies that simply allow them to "stash the cash" with other wealthy institutions or thru executive bonuses ( which also could never be spent) in able to be even more wealthy. Low-paying and mid-range jobs for the still lower and middle classes who will work to further enrich a big multinational, and maybe in some cases a select few politicians or rich business leaders. Yippee! Let's do it!
    I was referring more to the procedural streamlining that Apple is asking for, not so much the amount of taxes paid or avoided. I don't know enough to comment on the latter subject, and I get a headache just thinking about it.

    A general obsevation about global industrial culture in the 21st century, though, is appropriate in the case of India vs. Apple, or in the case of the new US administration vs. Apple, for that matter.

    I was thinking more about the nature and scope of Apple's massive just-in-time Internet-communications-enabled supply chain — more like a planetary design and manufacturing organism than a "chain." 

    Of course India has never "done this for anyone." No single company has had to operate across borders ever at the scale and speed that Apple is forced to do because of the geographical spread among the design, engineering, prototyping, manufacturing, distribution and servicing, not to mention the far-flung research and development centers that contribute back to the design initiation process in California.

    This is new, for India, for the world, for history, and especially for retrograde 20th century "thinkers" like some of those in the new US administration. Like the East India Compnay did with international trade in the 18th century via their new technologies of maritime navigation, Apple and a few other supra-nationals are in the process of disrupting the world order one more time in favor of an inevitable planetary confederation based on electronic communication and jet air travel.

    India's neurotic attachment to bureaucratic detail left over from its colonial past is as outdated as "America first," though the latter is far more dangerous.

    — End of Sunday post-neoliberal homily.
    A very thoughtful post.
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