“Apple Inc. is willing to start making iPhones in India, but it wants a big helping hand from Narendra Modi’s government first,” Saritha Rai reports for Bloomberg.
“The Cupertino, California-based company is scheduled to meet with officials in New Delhi next week to discuss the prospects for setting up manufacturing facilities in the country this year,” Rai reports. “Apple, the most valuable company on Earth, is asking for a long list of financial concessions from India, one of the poorest countries. Among the requests, the company is seeking a 15-year tax holiday on imports of components and equipment, according to a person with direct knowledge of the matter.”
“Chief Executive Officer Tim Cook visited the country for the first time in May as he sought government approval for Apple to open its own stores,” Rai reports. “India has insisted that Apple, like any single-brand retailer, source 30 percent of its components locally, though the country is relaxing those rules so technology companies can operate stores for three years before meeting that requirement.”
“Still, Apple wants more,” Rai reports. “The company has sent a list of requests ahead of its Jan. 25 meeting with officials from several government departments, including Electronics and Commerce, the person said, asking not to be named because the matter is private. Apple is also asking for a waiver on customs duties for new and used equipment brought into India. The Indian Express newspaper reported Apple wants full exemption from duties on raw materials, components and capital equipment.”
Read more in the full article here.
MacDailyNews Take: The benefits of having Apple manufacturing and retail outlets outweigh any and all of the requested incentives.
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Apple will try to drive a hard bargain and probably lose out on the Indian smartphone market. India has every right to look out for its own country and I understand their dilemma. I’m not so sure Apple should try to extract so many concessions from such a poor country. I wonder what Samsung would do. They’d probably give in and get their products sold. Apple is too arrogant to give in. Maybe Apple is simply playing hardball because they’ve got nothing to lose. How many iPhones are going to be bought in India? A million or so? Is it even worth it for Apple?
You do know that India is about to pass China as the world’s most populous country, right? The Indian middle class is quite substantial in proportion, and huge in absolute numbers. Even a very small market penetration could make India one of Apple’s largest markets. Definitely worth whatever trouble it takes.
Those are points in India’s favor to get a better deal from Apple IMO.
Apple knows it’s not going to get everything it’s asking for. Just like any negotiation you go to the table with a big, long list that you know is going to be pared back. The Indians will drive just a hard bargain as Apple will.
India is imposing, or attempting to impose, significant requirements on Apple before it will allow the company to operate stores and sell products within their country. Requiring Apple to source 30 percent of its components locally is a huge requirement. Apple could not sell its products in the U.S. or most other countries in the world if similar conditions were applied.
I understand India’s desire to accelerate high-value manufacturing within its borders. But Apple has a right to push back. In the end, Apple and India will either reach a mutually satisfactory agreement, or Apple will back off for a while until there is a shift in India’s government.
This is simply a business deal. Apple faces much greater long term difficulties in China, in my opinion, both because of the nature of the Chinese government and the fact that Apple has much less leverage. Even if Apple wanted to reduce its reliance on China, it would take decades to develop alternatives to the existent component and assembly supply chain in China.
Kudos on a well balanced perspective.
India does not owe Apple a living.
Apple does not owe India anything.
Who can stand without how much for how long? It’s a negotiation of attrition.