India Rejects Apple’s Demands for Special Tax Incentives

The Indian government has rejected Apple’s demands for special tax incentives that it sought to expand its manufacturing operations within the country, according to a new report.

In fact, India did not accept “most of the demands” that Apple was seeking for establishing manufacturing bases, a senior official said. Apple India, specifically, sought concessions including “duty exemptions on manufacturing and repair units, components, capital equipment including parts and consumables for smartphone manufacturing and service/repair for a period of 15 years,” Commerce and Industry Minister Nirmala Sitharaman replied to a question in Parliament, according to the India Times. And the Indian government has been resistant to the idea of granting Apple special tax retreatment since early this year.

Apple is already planning on manufacturing iPhones in the country at an assembly plant in the southern city of Bengaluru, India. Operations there will largely be left up to Winston Corp, which will begin assembling iPhone 6 and iPhone 6s models within the next four to six weeks, and iPhone SE models in about three months, according to the Wall Street Journal. Notably, Apple’s concession demands do not pertain to this plant, so it will not be affected by the authorities’ decision, the India Times noted.

India could turn out to be a key economic market for Apple, who has less than a 5 percent market share in the country. Late last year, Apple had its application to open retail outlets in India rejected, due to a rule that requires 30 percent of its components to be built locally. Beginning with the Winston-run plant, however, Apple could replicate its China model in India — which could help the company secure and grow its dominance in the country’s booming smartphone market. And, if it works, it could be a successful strategy, as India’s rapidly expanding market could overtake the U.S. this year as the second largest behind China.