Apple detailed Indian iPhone manufacturing demands to Modi in October letter
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.
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
Its not crazy that the whole thing falls through
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.
"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.
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.
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!
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.
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.
Look it up.
http://fortune.com/2016/06/08/fortune-500-most-profitable-companies-2016/
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.