Apple asked India to defer a planned increase in import taxes on mobile phone parts so it can expand its iPhone manufacturing in the country. Basically Apple is saying that unless you do what you are told we will not set up all those plants which are designed to make us rich in your country.
However, it seems that the government is not buying that argument and despite Apple lobbying politicians and officials for months demanding government tax breaks and incentives the Indians do not see the point. Apple needs the Indian market more than the Indian government needs Apple, particularly as the Chinese market has become bored with Jobs' Mob’s expensive toys.
While India’s government has been keen to get Apple to manufacture in India as a showpiece investment, it wants Apple to use local parts. Apple will not even talk about that unless India agrees to the same sort of tax dodges it enjoys in less civilised countries.
The Tame Apple Press is furious saying that it is terrible that Apple made all that effort to make a “cheap” iPhone SE for the Indians and now they are insisting Apple pays tax.
Despite a boom in smartphone sales in India, Apple’s market share is only around two percent there. Counterpoint Research data shows that while more than three quarters of smartphones sold in India are made locally, about 90 percent of the $14 billion worth of mobile components are imported.
To change that scenario, India imposes a 10 percent tax on imported components such as batteries, chargers and headsets.
Under a “phased manufacturing program” (PMP), the government plans to extend the taxes to more components as a way of nudging parts makers to switch to more local production.
Apple has said it would be able to create 5,000-10,000 jobs in India as and when it expands there. We guess the Indians have crunched the numbers and worked out that Apple needs to set up shop to make money and if the government demands it pays tax it can afford to create new jobs with the cash.