Govt looking at duty exemptions sought by Apple on SEZ-sourced products

At present, import duties are levied if items produced in SEZs are sold in the domestic market

The government is working on certain options to accommodate demands related to tax and duty concessions sought by iPhone maker Apple for setting up a manufacturing unit in India.

Although the Finance Ministry has prima facie rejected the demands of the US-based technology major, senior executives of the company met an inter-ministerial group recently to deliberate upon the issue.

The group discussed at length the demands of the company, sources said, adding that the government is trying to find ways through which certain support measures could be extended to the American firm.

Sources also said the company is asking for concessions as it wants to bring in its supply chain or component makers to the country as Apple cannot source inputs locally.

The company also wants duty exemptions on the products to be bought from special economic zones (SEZs).

At present, goods exported from SEZs do not attract any duty but import duties are levied if items produced in special economic zones are sold in the domestic market.

There is a possibility that this demand could be met by the government as several domestic companies are also demanding for the same.

On the other hand, certain duty concessions being sought by Apple are very difficult to meet as India is gradually becoming a manufacturing hub of smartphones.

A strong supply chain is being established in the country despite any sop or concession offered to any player. Also, no domestic or foreign manufacturer has sought any concession from the government so far.

There is dilemma that if the government extends support to Apple, it may weaken this strong supply chain.

"So the government has to make a balance," sources added.

Apple has also sought relaxations for consumables for smartphone manufacturing and service or repair for 15 years.

In January, Apple had indicated to the government that it is ready with a blueprint to begin manufacturing iPhones in India, but wants fiscal concessions, including customs duty waiver on import of components.

The company sells its products through Apple-owned retail stores in countries like China, Germany, the US, the UK and France, among others. It has no wholly-owned store in India and sells its products through distributors such as Redington and Ingram Micro.