APPLE’S TERMS AND CONDITIONS – HOPE GOVT DOES NOT SAY “OK JAANU!”

By Ruma Dubey

Apple is once again setting shop in Bangalore and that too to make its iconic iPhone. But because it is the most valued or aspirational smartphone on earth, Apple is not going to accept its treatment in India like other mere mortals. It wants to set shop in India to increase its own earning but it has listed out its set of terms and conditions. No one else would have the gumption to do; maybe Tesla but the idea that Apple can get the Govt to bend over backwards to accommodate its demands reeks of arrogance.

Take a look at its demands as was first published by Indian Express.

1: Full duty exemption on manufacturing and repair inputs (raw materials), yield loss on inputs, components, capital equipment (including parts), and consumables for smartphone manufacturing and services/repair for a period of 15 years for both domestic and export markets.

2: Apple does not plan to source components locally and hence has asked for cuts in the duty taxes on various components, completely knocked down (CKD) and semi knocked down (SKD) units of iPhones that will be assembled in India.

3: Apple wants inclusion of “used” capital goods, spare parts and components under the scheme for duty free imports. The EPCG scheme currently forbids import of second-hand capital goods or spares.

4: Expeditious processing of Apple’s Advance Pricing Agreement in the Income Tax Department to achieve certainty on the arm’s length pricing applied to international transactions between the Indian company and its overseas affiliated companies.

5: Aligning Customs procedures to provide less intrusive inspections, “always open” clearance process, combined declarations on a periodic basis rather than declaration at each transaction, suspension of paying GST at the point of importation so as to avoid actual tax payments, followed by claims for refunds so that administrative and cash flow costs could be evaded.

6: To relax labeling rules so that it does not have to print product-related information directly onto devices to avoid cluttering their minimalist design. 

Last year, Tim Cook announced plans to set up a manufacturing hub in India and open retail outlets all over the country. But there is apparently a catch there. As per the FDI rules, single brand retailers which bring in more than 51% stake need to buy at least 30% of the manufacturing material from Indian vendors, mainly from small and medium scale vendors. This requirement can be waived if the retailer is bringing in a state of the art, cutting technology, which is not available in India. To ascertain this waiver, a panel in Delhi scrutinizes the proposals. This was done so for Apple and the panel recommended that this local sourcing rule could be waived off. But the Foreign Investment Promotion Board, along with the Finance Minister Arun Jaitley have disagreed.

Tim Cook knows the potential of India and nurtures no disenchantment like its founder, Steve Jobs. Thus he and his plans for India have been welcomed with open arms and wide smiles. Without making any significant investment in the country, Apple has shown a 56% growth in revenue in its first quarter but has just 3% of the smartphone market share. Apple does see the opportunity that India represents and having its own retail outlets across India will surely boost its growth further. Apple currently sells its products in India through a network of Indian-owned distribution companies and retailers.

If India bends down and shows preferential treatment, it will send out the wrong message and set a precedent. Just as we respect the rule of their land, they too need to respect ours. The notion that everything in India can be negotiated needs to be debunked. We also need to be firm on our rules and create a sense of level playing field and not change rules as per the whims of the companies.

Yes, we need FDI but that will come; Apple needs India today as much as we need them.