Apple requested the Indian government offer tax breaks to its suppliers if the country aims to become a major manufacturing hub for smartphone components and iPhones, Reuters reported.

To meet the request, government officials said, a new policy would need to be worked out which applies to all device makers.

Reuters quoted an official as saying: “They want the same treatment to be given to component manufacturers.”

In early June the government asked Apple to detail its long-term investment plans for manufacturing iPhones in the country, including the number of jobs it will create, before it will consider a request for tax concessions.

Apple started producing iPhone SE smartphones in India in May, with output reportedly between 25,000 and 50,000 units a month. India is only the second country where iPhones are produced after China.

The smartphone giant reached a deal in mid-February to start assembling lower-priced iPhones, with contract manufacturer Wistron setting up a facility in technology hub Bengaluru (Bangalore). Sources said at the time Apple planned to go ahead with production without waiting for the government to approve a list of requested tax incentives.

Local compliance
Apple implemented steps to comply with local content requirements, which have increased as Prime Minster Narendra Modi’s government pushes its Make in India campaign. Counterpoint Research estimates three-quarters of smartphones sold in India in 2016 were made locally.

The country’s Department of Revenue in March rejected Apple’s request for tax incentives for it to start local production of iPhones, but the government said at the time it was reviewing its overall manufacturing policy to stimulate support for Make in India as well as attract overseas investors.

As part of its preconditions to manufacture in India, Apple asked for a waiver of custom duties on imports of components and equipment for 15 years as well as an exemption from the country’s 30 per cent local sourcing requirement.

iPhone shipments in India reached 2.5 million in 2016, with a third coming in Q4, according to Counterpoint.

India is the second largest smartphone market in the world after China and is one of the fastest growing.