Chanakya IAS Academy Blog


No special treatment to Apple

The government has been trying to invite major technologically advanced and knowledge-intensive Multi National Corporations (MNCs) to come and invest in India under Make in India Programme and other summits, seminars and conferences. But in a clear indication that GOI is not willing to compromise on impartiality and fairness, it is likely that Ministry of Commerce and Industry is going to decline the special concessions demanded by the US major Apple.

Apple is planning to set up a manufacturing unit in Bengaluru in order to produce its trademark products- iPads and iPhones, in order to tap the exploding Smartphone market in the country. It wants relaxations on multiple fronts, including excise and import duty reductions and relaxations in labeling and local sourcing norms.

Besides, Apple is not the only company planning to manufacture smartphones in the country. India is home to at least 40 mobile companies’ manufacturing units already. Samsung, Xiaomi, Google, Foxconn are some of the major global players who are already (or are soon likely to begin) manufacturing in the country. Thus, it is probably not correct to give special treatment to an individual company, especially when other companies did not even demand for these concessions.

Though Apple wants to take advantages of India’s cheap labour supply, GOI on the other hand, is desirous of substantive value addition, value chain improvements, employment generation, manufacturing growth and exports.

According to the Ericsson Mobility Report, 2016, Mobile subscriptions are expected to hit 1.4 billion by 2021. This is because of growing mobile penetration into both rural and urban households. Africa, on the other hand, does not enjoy similar purchasing powers, making India one of the hottest destinations for this sector.

Besides, the government is trying to utilize Smartphone technology in order to achieve Good Governance, ease of doing business, social welfare and financial inclusion thorough its JAM agenda – Jan-Dhan, Aadhaar and mobile telephony linkages- in order to capitalize on this opportunity.

Presently, Government is trying to promote the manufacturing of electronics products within the country. China, South Korea, Japan are the global suppliers of such items along with USA, Germany and United Kingdom. India has similar prowess in the services sector but the sector remains highly skill-intensive, creating very few employment opportunities for India’s poor. To achieve drastic reductions in poverty, it is important to infuse manufacturing sector too.

But, as correctly believed by the government, India cannot discriminate between companies in the blind pursuit of its goals. What we need is a transparent, open and a fair policy which takes each case on its own merit, while simultaneously being perceived as non-discriminatory.

The 30 % local sourcing requirements on FDI in single brand retail is designed to create back and forward linkages in India’s manufacturing sector. Simply inviting FDI without such norms is likely to bring economic growth but not development.

Apple’s argument that India’s domestic manufacturing sector is not yet ready to meet the MNC’s requirements of making “cutting edge technology” items domestically, it becomes even more important to take it as an opportunity to develop the same.

India should not end up becoming merely a consumption market for global MNCs. What India needs to become is a global manufacturing powerhouse, much like today’s China, to fully take advantage of India’s demographic dividend and do justice to its citizens.

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