India may find it difficult to accept Apple’s demand for a 15-year exemption on countervailing duty (CVD) on imported components as the country plans to roll out the goods and services tax (GST) in the coming financial year.
“There is no way we can give individual exemptions under GST regime,” revenue secretary Hasmukh Adhia told ET. “All of them (CVD exemptions) will go” Whatever the tax on local industry, the same will become IGST or integrated GST that will be levied on inter-state trade, he pointed out. “Make in India will get a big boost,” he said. “We have been unfair to local industry. I don’t know what exactly is Apple’s demand as DIPP (Department of Industrial Policy and Promotion) is dealing with them. But we have limitations on giving exemptions under GST.”
Prime Minister Narendra Modi, who’s been seeking to persuade Apple chief executive officer Tim Cook to set up plants in India, tweeted a media report on Saturday that it would start making iPhones in Bengaluru soon. Meanwhile, people familiar with the matter have said the company is still in talks with the government over concessions regarding local manufacturing. When asked about the final call on IGST exemption, Adhia said the decision would lie with the GST Council.
GST will subsume central taxes such as central excise duty, services tax, countervailing duty and state taxes including value-added tax, octroi and purchase tax. It is expected to be implemented from July 1. Countervailing duty is levied as part of import duty in lieu of central excise duty.
The Cupertino-based company had sought the government’s assurance on CVD exemption for electronic components for 15 years as it looks to set up factories in India. The company has also sought relaxations under the modified special incentive package scheme (M-SIPS).
The government scrapped the exemption for populated circuit boards (PCBs) in the February 1 Budget. It had removed CVD exemption for three components, including PCBs, in the last Budget, but restored it following industry demand. The exemption has been abolished to boost the Make in India programme.
Apple wants the exemption as its components makers may not relocate immediately to India, increasing its dependence on imported parts. Senior Apple executives met government representatives of various departments at a meeting called by DIPP last Monday.