The company has asked for incentives specifically from the Department of Revenue and the Department of Electronics and Information Technology in India as a way to offset the high cost of building an entirely new iPhone manufacturing unit in the country.
Throughout the year, Apple struggled with India's local sourcing laws, which requires 30 percent of goods sold by a foreign company to be manufactured or produced within India, a law which also hampered Apple's retail expansion because it creates most of its products in China. Over the summer, Indian Prime Minister Narendra Modi made it easier for Apple to expand its retail stores in the country by approving a three-year extension on the local sourcing laws because of its single-brand company status selling "cutting-edge technology."
These various extensions will only last for a few years, however, so Apple's seeking of financial incentives for its new manufacturing plant proves its long-term goal to have a consistent presence within India.
"They are doing their due diligence from quite some time. The Department of Industrial Policy and Promotion (DIPP) will write to both the departments regarding this communication for their views," the official added.In the spring, Apple CEO Tim Cook visited India to discuss manufacturing and retail opportunities with PM Modi. In terms of retail sales, Apple's Authorized Mobility Resellers program has allowed Apple to skirt the country's restrictive retail presence rules, but still lacks the ability to bring in big sales numbers from India.
At present, to boost electronic manufacturing in the country, the government provides benefits under Modified Special Incentive Package Scheme (MSIPS). The scheme provides financial incentives to offset disability and attract investments in the electronics hardware segment. It also gives subsidy for investments in Special Economic Zones, among other benefits.
In the midst of Apple's struggle to expand in India, a report from Strategy Analytics in August described a drastic percentage dip in iPhone users from 2015 to 2016, with 35 percent fewer iPhone devices sold this year. One reason for its deflating sales in the country, according to Tim Cook, could be the fact that iPhones are too expensive in the country, priced around 31 percent higher than they are in the U.S.