After Centre, Apple to face states' obstacles to Make in India

The company will require support of states as country adopts GST in the next financial year

The Central government may be keen for Apple to set up manufacturing facilities in the country, but this may not be enough — the states will need to come on board as well, according to a report published by The Economic Times. 
 

Apple's key demand — predictability and certainty of countervailing duty (CVD) exemption — will require the support of states as the country adopts goods and services tax (GST) in the next financial year. Imports will then face Integrated GST in place of countervailing duty, which is levied in lieu of central excise duty. GST will subsume central taxes such as central excise duty, services tax, countervailing duty and state taxes, including a host of various other taxes, further reported the financial daily. 
 

Business Standard had reported the demands by Apple earlier this month. 
 

"Exemptions under the GST regime will have to be decided by the GST Council," said a government official, indicating how difficult it will be for the Centre to offer assurances on this score. 
 

CVD is levied as part of import duty, but states have made clear that as it's in lieu of excise duty they want a say in what will be taxed and what will be exempt.
 

A committee of central and state officials has been tasked by the GST Council to decide on the brackets goods will be placed in and those that will be exempted. The GST Council will take a final call on the committee's recommendations. 
 

The Centre will have to convince states to continue with the exemptions that it may deem imperative in the larger interest of the country. Prime Minister Narendra Modi had called upon Tim Cook to set up manufacturing plants in India during the Apple chief executive's trip to the country last year. Officials have said roping in a high-profile company like Apple, which mostly makes its devices in China, will give the 'Make in India' initiative a big boost. 
 

Components used in mobile phones are exempted from basic customs duty, under the WTO Information Technology Agreement. India has also exempted these from 12.5 per cent CVD but brought three items back into its ambit last year to encourage manufacturing in the country.
 

Apple has sought the government's assurance on continuing the CVD exemption for 15 years. It has also sought relaxations under the modified special incentive package scheme (M-SIPS) that allows second-hand capital goods imports of up to 20 per cent of total investment. 
 

Besides, it wants changes to the definition of manufacturing under excise duty, which recognises a mere change in label as manufacturing and also changes to labelling provisions under the Indian Metrology Act. 
 

Apple wants an assurance on CVD exemption as the government removed it for the three components last year and the company is concerned that this list may further expand in coming years. "They want predictability and certainty in tax regime as any mid-term tax shock can topple all their financial calculations," said the official. 
 

The company is keen on clarity in CVD exemption as its component makers may not immediately set up shop in India and it may have to rely on imports for some time. Any exemptions allowed would be available for all device manufacturers, not just Apple, said the report. 
 

"Their demands would be examined by the departments and then they will respond," the official said.