In an Internet Conference in China, Apple CEO Tim Cook along with Facebook’s VC praised China on IT and internet. Can Apple chief’s frequent visit to China ruin India’s dream of Made in India iPhone?
The Problem Companies like Tesla and Apple Face
China, a country with lots of censorship was praised by Apple’s CEO Tim Cook took everyone to surprise. China, though a very strict country has eased out laws for business. The smooth infrastructure of China also attracts big companies like Apple and Tesla. India suffered an opportunity loss when Tesla choose China for opening a manufacturing plant over India.
There were few reasons. First was the infrastructure problem that India lacks while the second reason was the bureaucratic slowdown. Tesla complained that it is reluctant to manufacture in India because of the clause that compels such companies to use at least 30% Made in India components.
Apple too came up with the same problem of 30% made in India manufacturing clause and also asked the Indian government to relax high duty charges and give some tax relaxation. The government of India has now again asked Apple to come up with a new proposal. Minister Suresh Prabhu said that the government is ready to help Apple in every way possible.
Long Back in May, using the Make in India twitter handle, government also issued a clarification refuting these facts presented by respective companies:
— Make in India (@makeinindia) May 23, 2017
Taxation Structure and Business Methods
The tortoise walk of Indian Bureaucracy followed by some outdated business laws and complex tax structure has kept big companies out from investing and manufacturing in India. Many top brands available in India either import goods from other countries or they just assemble it.
Apple for the first time assembled its first iPhone in Bengaluru. The assembled in India iPhone SE came to the market with the same rate despite the hope of a reduction in rate. The reason for such high rates were attributed to high import duty, customs and excise.
The other reason is lack of infrastructure, lack of units to manufacture small components, dependence on Indian dealers. It is unlikely that Apple will desert India like Tesla did because Indian market is promising. Despite a 12% dip in global sale, Apple grew by 40% in India and is expected to sell around 3.2 million units in 2017.
What requires is a flexible approach by the Indian government to ensure that companies like Apple and Tesla don’t face trouble in doing business and manufacturing in India.