iPhone Manufacturing in India Confirmed, but There is Still the GST Challenge

Updated: February 21, 2017

Apple, after a long discussion with the Indian government, has finally gotten approval to set up a plant for manufacturing of iPhones in India.

Apple iPhones will now be “Made in India,” and Bengaluru is where this will be taking place, according to the government. For Tim Cook and his team, this is a major push as far as Apple’s expansion plans in India are concerned.

The approval to set up the manufacturing plant in India was given by the Karnataka Government on Thursday, the second of February, 2017.

The Apple factory in Bangalore, Karnataka, is to be run by Wistron, and all Apple devices produced will be sold locally. The iPhone manufacturer believes that the move can increase iPhone’s presence in India, where, because of its price tag, it has somewhat struggled in the past.

The manufacture of iPhone in India would consequently lead to Apple being able to cut costs and reducing its price tag locally. This reduction in price will help the company sell more of its iPhones in the world’s third largest smartphone market and one of the world’s fastest-growing smartphone markets.

The Karnataka government on Thursday said that it welcomed the proposal from the Apple Company to begin manufacturing operations in India. A public release was made by the Karnataka government to welcome the move, though no word has been heard from Apple yet.

According to the release made by the government of Karnataka, having a manufacturing unit in India is sure to “foster cutting edge technology ecosystem and supply chain development in the state, which is critical for India to compete globally. The Government of Karnataka is committed to new initiatives in any sector for manufacturing and will provide a conducive environment for investment.”

It also said that setting up of the plant will be at Peenya, close to Bengaluru. The time hasn’t been set yet, however, it is probable that the production will begin by June. The report has it that the government is also in discussion with Apple regarding providing their other services.


This is a welcome development in India, as having a manufacturing will mean they will finally have cheaper phones. Also, Apple phones will be made available in India the same time it been available in the US. There is also a possibility that the Apple Company will bring out phones that are customised for the Indian people.

During the negotiation process, Apple had asked for an exemption from paying taxes on parts or technologies imported to be used for the manufacture of their products in India. The exemption request seemed to have come at an unfortunate time, as India sets to begin the new Goods and Services Tax (GST).

GST is an indirect taxation proposed in India that merges most of the existing taxes into a single system of taxation. Goods and services tax would be an all-inclusive indirect tax on the manufacture, consumption, and sale of products and services throughout the country of India.

This system is to replace the taxes levied by the central and state governments. With these new rules, Apple will be required to pay import duty fees on whatever they decide to bring into the country. Apple’s expansion scheme in India rested on the optimism that taxes will be waived off for them so that their growth will be rapid.

According to the revenue secretary, Hasmukh, as he was explaining to the Economic Times that there was no way they could give individual exemptions under GST regime. “All of them [the existing exemptions] will go [with the new GST]. We have been unfair to the local industry. I don’t know their exact demands, but we have limitations on giving exemptions under the new GST.” Hasmukh said.

As would be expected, Apple will meet with the Indian government for further discussions on the present issue. Apple would need to demand final clarifications from the Indian government on a lot of aspects that will pave the way for Apple’s expansion in India.

Tim Cook will want to get a green light on the issue as early as possible so that he can push forward Apple’s expansion plans in India.

In conclusion, it cannot be said right now whether the result of further meetings to resolve the present situation will be in favour of Apple or not.