Apple Inc. (NASDAQ:AAPL) reportedly has a blue print and is ready to produce gadgets in India. Apple executives were in the country this week to articulate a deal to make their gadgets in India. The executives were in talks with Indian government officials to set the terms that would involve Apple setting up a plant in the country to make their products.
The company is seeking for up to 15-year tax holiday on all imports into the country such as components and other requirements it might need to set up the manufacturing plant. Indian government officials in a bid to lure the giant Tech firm to home turf have said that most of the concessions are taken care of by the budget.
This deal would have several benefits such as the employment of thousands of local workers and the easier access to Apple products. Furthermore, it would help with the hitherto unsuccessful bid by Apple to open up retail stores in the country. Indian government policy stipulates that for a company to open retail stores in the country, it must have their products built in India.
On top of the 15 year tax concessions on imports, Apple is seeking relaxed labeling norms and exemption from domestic sourcing for up to a third of the inputs used in the manufacturing. The government of India in trying to accommodate Apple will likely reduce the excise duty from 12.5% and apparently these excise duties have already been set up in the budget. However, the tax burden will be picked up by the final consumer, as the tax on the finished product will likely be raised from the normal 11% -15%. A zero duty might be levied on some components and this is in a bid to help domestic manufactures and assemblers.
Ministries in the government of India have opposed approval to sell refurbished phones in the country, pushing manufactures to make new products for sale. The government policy on companies selling gods manufactured outside India has a three year waiver but from the look of things, Apple’s ambitions in India far exceed the three year mark.
Apple stock closed at $121.88 after increasing $1.91 or 1.59%.