Apple sellers in China: The government may allow select Apple sellers in China to set up factories in India

The government may allow Chinese Apple vendors to set up factories in India on a case-by-case basis after ensuring that the Cupertino-based iPhone maker has no other choice to obtain components, officials familiar with the matter said.

They said the government is open to investments by Chinese entities that provide technology and production capabilities for which there is no alternative.

“If there is no alternative to the technology that the seller must provide, the government will have no problems allowing it unless there are some concerns about the entity,” said one of the officials.

If there are some concerns about the seller and no alternative is available, the Indian manufacturer will need to import the components. The official said the government will also propose technology transfer for local manufacturing, a model it has followed in the case of investments from China. “We have asked them (Apple) to provide a list of suppliers,” the official said, adding that those will be checked before the government gives its approval.

Apple did not respond to inquiries.

The government has been urging the world’s most valuable company to bring its complete industrial system to India which includes iPhones, iPads and computers.

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The company that recently launched the iPhone 14, the latest iteration of its best-selling product, has gradually increased Indian production to reduce dependence on China.

Analysts and industry executives estimate that the December quarter will see Apple’s highest-ever shipment of iPhones to India at around 570,000 units compared to 370,000 units last year, ET reported earlier this month.

However, Apple continues to import many components. India in April 2020 modified its foreign direct investment (FDI) policy and made a mandatory advance government gesture for foreign investment from countries with which it shares a land border, a measure that was largely seen as targeting Chinese investment.

The Department for Promotion of Industry and Internal Trade (DPIIT), while making the change, said in its press note that this is aimed at “reducing opportunistic takeovers/takeovers of Indian companies due to the current Covid-19 pandemic”.

These changes in FDI policy indicate that any FDI from Bangladesh, China, Pakistan, Nepal, Myanmar, Bhutan and Afghanistan needs prior government approval, regardless of the FDI ceiling applied to this sector. Pre-approval has been made mandatory for sectors that were otherwise on the automatic track. This applies even to indirect FDI from these countries directed through other countries.

A ministerial committee set up to consider proposals for foreign direct investment from China has so far approved investments in Citizen Watches Co, Nippon Paint Holdings and Netplay Sports.

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