Apple seeks financial incentives before setting up Indian manufacturing
Apple is seeking financial handouts from the Indian government before setting up a manufacturing unit in the country, according to a new report.
The incentives are connected to the Department of Revenue and the Department of Electronics and Information Technology, India's Economic Times said.
"They are doing their due diligence from quite some time," an official told the publication. "The Department of Industrial Policy and Promotion will write to both the departments regarding this communication for their views."
Apple and its manufacturing partner(s) could receive help under the Modified Special Incentive Package Scheme, which among other things can provide subsidies if a company sets up shop in one of India's "Special Economic Zones" -- areas with lowered government regulations designed to lure foreign firms.
Since Apple currently operates just one factory of its own, located in Ireland, Indian manufacturing would presumably be handled by Foxconn. That company was already reportedly interested in setting up an Apple-oriented factory, possibly including iPhones.
Establishing manufacturing could be a prerequisite to opening local Apple stores. In August India's finance minister ratified a proposal that could let single-brand retailers like Apple be exempt from local sourcing rules for three years, so long as they provide "cutting-edge" technology. At the end of those three years, though, Apple would have to have substantial local production in place.
The incentives are connected to the Department of Revenue and the Department of Electronics and Information Technology, India's Economic Times said.
"They are doing their due diligence from quite some time," an official told the publication. "The Department of Industrial Policy and Promotion will write to both the departments regarding this communication for their views."
Apple and its manufacturing partner(s) could receive help under the Modified Special Incentive Package Scheme, which among other things can provide subsidies if a company sets up shop in one of India's "Special Economic Zones" -- areas with lowered government regulations designed to lure foreign firms.
Since Apple currently operates just one factory of its own, located in Ireland, Indian manufacturing would presumably be handled by Foxconn. That company was already reportedly interested in setting up an Apple-oriented factory, possibly including iPhones.
Establishing manufacturing could be a prerequisite to opening local Apple stores. In August India's finance minister ratified a proposal that could let single-brand retailers like Apple be exempt from local sourcing rules for three years, so long as they provide "cutting-edge" technology. At the end of those three years, though, Apple would have to have substantial local production in place.
Comments
I don't like seeing big & relatively rich American corporations wrangle tax incentives from US states to build plants or add jobs/equipment. Amazon for instance doesn't need any financial assistance to build warehouses that they financially benefit from nor do big pharmaceuticals or health providers moving or adding headquarters. Yet State lawmakers who generally are relatively well-off themselves stumble all over themselves to pass these giveaways. For what reason should a wealthy corporation receive tax benefits, to make themselves even wealthier? They're going to build plants and add offices anyway if the business is there. That this occurs in poor countries with very high levels of poverty is worse.
India made laws requiring a certain percentage of products be Indian-manufactured in order to push companies to invest and create jobs in return for access to their consumers. If they don't think India is important enough to invest in then they don't get to sell there. Big incentive for access to the 2nd largest country by population. But to then water-down the benefits by giving companies tax breaks to do so?? Seems far too typical that tax laws benefit the ones making the laws to the detriment of those of lesser influence.
I fully expect some number of thumbs-down, but Apple doesn't need handouts no matter how much you like them. Nor do most other corporations. If you disagree than have the courage to explain why, but TBH I doubt anyone will. Anonymous downvotes don't require anything.
The trend has been for the rich to get ever richer, in many cases offering zero value to anyone including the owner of the wealth. At some point the anger of the have-nots will overflow. For someone like Mr. Trump to make so many mistakes and yet still be in the running for the Presidency is proof of that.
I hope India tells Apple to take a hike (so long as they also tell everyone else to take a hike -- they shouldn't play favorites).
As for India it doesn't matter if Vietnam offers Apple an incentive. That won't give them access to India, which I'm sure was one goal of the Indian content law. Apple's incentive is the money they'll make from selling to India's middle and upper classes.
It is only through corruption and coercion that corporations are able to extract these payments.
The fact that they all do it doesn't mean it's good and that we should just look away. It just means that Apple isn't uniquely bad here.
long time reader but registered just to comment on this.
there really is not a specific "financial" incentive (e.g. cash handout) for most economic development programs governments run. that said, these incentives are evaluated on a financial basis. but your points (and the original article) do not cover the entirety.
first off, India has no choice but to offer incentives as China, Vietnam, and even the USA etc. all offer similar packages to promote / attract foreign investment. thus India not offering or slimming down an economic package is like a smart phone vendor not offering a camera or putting a 2 MP camera on a phone. it'll be dead before it hits the market.
second, if they were to build a manufacturing plant there is land leases to consider, construction firms, heavy equipment investments, local / international logistics, staffing levels, production levels, local / regional / national corporate tax etc. assume this is a greenfield build, then most governments tend to provide various "incentives" to local construction firms participating because this gives them more control. you don't want Apple footing 100% of the bill... a big risk in any large scale capital investment is for the investor to pull out capital and you're stuck with a quasi-developed land that others may or may not want.
then on to taxes. again, many economic proposals use a tiered 3, 5, 10, and 15 year benefit expiration dates of some sort to ensure the corporation has ample time to really grow some roots in the local region. again, this works to the advantage of both parties. the longer a company is established in a region the harder it is to remove itself. the government basically trades short-term tax revenue for long-term economic growth.
also consider logistics infrastructure. will there be a local airport to handle freight? if not, what would it cost to construct one? are there advantageous flight routes to get materials and products in / out of plant? if not, what would it cost to get one established? what are the processes? do new highways need to be built for fleet based transportation? things like this can only be done by the local government and there is no way in hell Apple, Google, Amazon, or Facebook would be able to do this or able to pay / manage the project. once again, a huge economic incentive.
lastly to your point on population. so what? China has the world's largest population but at any point in time the government can shut down your operations and kick you out (e.g. Google) or pour massive amounts of money into a local competitor (e.g. DiDi Kuadi vs. Uber). how would anyone convince "rich western companies" to foot 100% of their international expansion bill to play in a market with relatively weak business and IP laws?
just some alternative thoughts. i have worked and evaluated a couple of economic proposals before... it is a very complicated process and by far not as straight forward as the Apple Insider paints it to be.
No good answer. States, and countries, are going to compete with each other to get the jobs, but it creates an uneven playing field between the large and small companies (similar to large companies have the resources to move operations overseas for tax benefits, but smaller companies usually do not). In this case, if having manufacturing in India is a requirement for selling products there, and if Apple really wants to get into that market it would seem that Indian lawmakers would have little motivation to provide significant incentives to Apple. But of course it'd be silly for Apple to not at least ask.