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3-min read

Tax Sops Should be Given to All Manufacturers, Not Just Apple: Experts

For Jaideep Mehta, Managing Director, International Data Corporation (IDC) South Asia, there are two dimensions to the Apple issue.


Updated:January 25, 2017, 4:24 PM IST
Tax Sops Should be Given to All Manufacturers, Not Just Apple: Experts
For Jaideep Mehta, Managing Director, International Data Corporation (IDC) South Asia, there are two dimensions to the Apple issue.
As Apple intensifies efforts to manufacture in India amid hectic diplomatic parleys, experts fear that doling out tax concessions to the Cupertino-based company alone will not go down well with several smartphone players.

Many of the companies -- especially from China -- have committed investments as part of the "Make in India" initiative.

The smartphone user base in India -- with Chinese brands dominating the market -- has crossed 300 million. In the fourth quarter of 2016, Chinese brands such as Vivo, OPPO, Lenovo and Xiaomi contributed 46 per cent of the total smartphone market -- up from 14 per cent a year ago, a report by market research firm Counterpoint said this week.

On the other hand, Apple sold 2.5 million units in India last year (with one-third of its total shipment coming from fourth quarter driven by seasonality and iPhone7). Apple was 10th in the smartphone rankings during fourth quarter of 2016 and a leader in the premium segment (above $450) where it had 62 per cent market share.

Apple wants India to waive taxes and duties on imports in exchange for setting up local manufacturing units. The tech giant had, last year, applied for tax concessions and relaxation in domestic sourcing norm which were rejected by the Finance Ministry.

"Apple is a very important player and can have a major contribution to "Make in India" programme. Even with 2 per cent market share in India, it is the second largest brand by value in the fourth quarter of 2016," said Tarun Pathak, Senior Analyst, Mobile Devices and Ecosystems at New Delhi-based Counterpoint Research.

"However, we believe that the government can bring in some policies not necessarily exclusive to Apple but which is in interest of the overall manufacturing ecosystem, especially mobile handsets where value addition is still 6 per cent even when we have 75 per cent of the total handsets being assembled locally," Pathak told IANS.

According to media reports, Apple has already picked Taiwan-based original design manufacturer Wistron Corporation over its biggest supplier Foxconn, which is also Taiwan-based, to manufacture iPhones in India.

"Manufacturing for any of the new phones will have to start two to three months in advance, making June or July the likely deadline for Apple securing a deal in India," AppleInsider reported on Tuesday.

"The Indian government should not look like tilting towards a big player with deep pockets as it has to think about the industry as a whole especially at a time when several smartphone players --especilly from China -- are planning to invest heavily towards manufacturing phones and accessories in India," added Vishal Tripathi, Research Director at global market consultancy firm Gartner.

In 2016, there were several "Make in India" announcements from smartphone makers like global internet technology conglomerate LeEco, Micromax, Vivo India, Huawei and LG, among others.

For Jaideep Mehta, Managing Director, International Data Corporation (IDC) South Asia, there are two dimensions to the Apple issue.

One is that the company is top-notch and has a marquee name in many ways and the government may possibly give some concessions and entice them to open manufacturing units in India.

"The other side of the coin is that today, almost 60 per cent of the smartphones are already assembled in India and none of these players have been given any special treatment. So their is no justification to give any one player special treatment and unfair competitive advantages," Mehta told IANS.

According to Mehta, Apple is primarily competing with Samsung's S7 and S7 Edge models.

"However, Apple still sells 5S in the mid-market range. The setting up of a manufacturing unit will definitely help it in other segments. Apple understands if they have local manufacturing, they will be able to shorten the supply chain. It will give them more flexibility. This is an advantage every other player has and Apple is no exception to that," Mehta added.

According to him, if Apple gets concessions and sets up manufacturing units in India, it will put them ahead in the race making it more difficult for rivals to compete.

(Get detailed and live results of each and every seat in the Lok Sabha elections and state Assembly elections in Andhra Pradesh, Odisha, Arunachal Pradesh and Sikkim to know which candidate/party is leading or trailing and to know who has won and who has lost and by what margin. Our one-of-its-kind Election Analytics Centre lets you don a psephologist’s hat and turn into an election expert. Know interesting facts and trivia about the elections and see our informative graphics. Elections = News18)
| Edited by: Krishna Sinha Chaudhury
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