Although most of India’s 1.2 billion people are largely too poor to buy an iPhone, Apple is preparing to meet with ministers from various governmental departments in India next week. Their plan is to negotiate government approval for Apple to create a presence in India. At this point, Apple’s involvement in the fast-growing Indian cell-phone market is only about two percent. A successful bargain could expand that percentage tremendously.
Last May, Apple’s CEO Tim Cook traveled to India to lay down the groundwork for negotiations, including their plans to assemble iPhones, refurbish pre-owned iPhones, and to open stores in India. Their goal is to set up manufacturing by this Spring,
On Apple’s part, some of their seven demands include 100% waiver of duties on materials, components and equipment imports for the next 15 years. They’d also like a policy change so the company can import defective iPhones, refurbish, and export them again. Other demands include some customs streamlining, a ruling from tax authorities on the transfer of pricing agreements, and less intrusive inspections. Some authorities believe that policy-breaking for the tech giant will serve India far less than it will the Apple coffers. They also believe iPhone's demands are excessive and unfair to foreign companies already operating in India.
But, some Indian officials, such as Information Technology Minister Ravi Shankar Prasad, have said they will keep an open mind. "We will very much like Apple to come and have a base in India," Prasad has said. "We want to make India a big hub of electronic manufacturing."
While Prime Minister Modi wants companies to make their products in India, he doesn’t want companies to take advantage of India’s huge market and sell products without making their own capital investments. Although India wants Apple to source 30% of it’s components locally, they’ve indicated a willingness to drop that requirement for the next three years so that Apple can establish itself swiftly. India’s ‘Make in India’ policy is that companies are bound to make their products in India, to create manufacturing plants and provide locals with jobs.
While Hon Hai Precision Industry is Apple’s regular manufacturing source, Apple plans to team up with Winstron Corp of Taiwan for the Indian project, instead. Wistron is setting up a new plant in Peenya, the industrial sector of Bengaluru, which is where Apple is rumored to hope to begin assembly. As most of the expensive components would be produced elsewhere, the added local value wouldn’t just be jobs, it would be the potential for the creation of local supply sources.
India expects their consumers to buy 500 million smartphones in the next few years. Low-cost devices from Samsung Electronics Co. and Micromax Informatics, Ltd., are already flourishing, thanks to their low cost. If Apple can negotiate a deal with the Indian government, iPhones they manufacture there could be cheap and help Apple gain a foothold in India's growing, cell phone market.