India uses generous subsidies, hefty import taxes to woo Apple suppliers
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India uses generous subsidies, hefty import taxes to woo Apple suppliers
India is gaining more and more of tech colossus Apple’s supply chain business thanks to a carrot and stick approach: generous subsidies combined with hefty import taxes.
Pranav Kiran for Reuters BreakingViews:
Helped by generous subsidies, Taiwanese Apple suppliers are starting to churn out more iPhones in India. Wistron was the first to set up a factory to make the devices in 2017 around the technology hub Bengaluru. Foxconn, formally known as Hon Hai Precision Industry, and Pegatron followed…
Shipment numbers are small, but India is at an inflection point. The newest iPhones used to be made in China first, with Indian factories only following with the same models some six to nine months later. This gap has narrowed substantially with the iPhone 14 and it could vanish over the next few years. JPMorgan reckons India might produce one in four iPhones by 2025.
Trade tension between Beijing and Washington, and Covid-related supply chain snarls, are merely an accelerator. India has used hefty import taxes as a stick to get companies to set up factories on its shores: The country is no longer a net importer of mobile phones because budget handset makers like China’s Xiaomi produce enough cheap devices locally to cater to booming domestic demand. New Delhi’s more recent, generous production-linked incentives are designed to address the premium market for products costing over 15,000 rupees, about $180.
MacDailyNews Take: Apple’s footprint in India will continue to grow for decades.
India should accommodate Apple suppliers as the benefits far outweigh any tax breaks (jobs, other taxes such as income, sales, etc., and ancillary businesses that cater to the suppliers and to the suppliers’ employees (real estate, grocery stores, restaurants, home goods, etc. – all of which also pay taxes). – MacDailyNews, August 1, 2017
India will help power Apple’s growth for many years. – MacDailyNews, January 4, 2017
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