India reluctant to give special tax incentives to Apple

Thu Jan 5, 2017 9:16am EST
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By Manoj Kumar and Mayank Bhardwaj

(Reuters) - India is resisting tech giant Apple Inc's (AAPL.O: Quote) demand for tax incentives to make iPhones in the country, with the trade minister saying on Thursday that the government may not make exceptions for the U.S. company.

Apple wants to open its own stores in India, but has been asked by the government to locally source at least some of the components, as part of Prime Minister Narendra Modi's bid to boost manufacturing in the country.

Apple has sought tax concessions, including lower import and manufacturing duties, to make iPhones locally, according to a government official familiar with the situation.

Trade Minister Nirmala Sitharaman said if India were to agree to any concessions, they would likely apply to all smartphone manufacturers, and not just Apple.

Apple declined to comment.

Apple's Chief Executive Tim Cook met Modi last May to talk about its plans to enter the Indian manufacturing and retail space. Cupertino, California-based Apple wants to boost iPhone sales in India, where it has only a roughly 2 percent market share, as sales in the United States and China slow.

Smartphone component maker Wistron Corp (3231.TW: Quote), which counts Apple among its customers, has applied for permission to expand its plant in Bengaluru, a regional government official told Reuters on Monday.

The tech giant had earlier asked for a permanent relaxation of rules requiring 30 percent local sourcing for foreign retailers setting up single-brand outlets, which was rejected by the finance ministry. India has relaxed these rules for just three years for single-brand foreign investors.   Continued...

A salesman checks a customer's iPhone at a mobile phone store in New Delhi, India, July 27, 2016. REUTERS/Adnan Abidi