A new report out of New Delhi today notes that the Ministry of Electronics and IT (MeitY) is optimistic that Apple would soon be able to start local production through its contract manufacturer. MeitY secretary Ajay Kumar stated for the report that "We are supportive of Apple's proposal (to manufacture in India)," even though a final decision is pending. Beyond devices, Apple Pay will also tie in well with India's move gradually shifting to a less cash economy.

Apple's team met with Government officials on January 25, 2017. The one major hurdle left is Apple's demand for a 15 year exemption on countervailing duty on imported components, a demand India is finding difficult to accept under the soon to be rolled out goods and services tax (GST). Revenue Secretary Hasmukh Adhia recently told reporters that there can't be individual exemptions under GST.

But the Department of Industrial Policy & Promotion (DIPP) which is anchoring the Apple-government talks, recently indicated that a way could be found with some tweaks to existing policy but stressed that any change will be for the industry as a whole and not for any one company.

MeitY secretary Ajay Kumar added that "We have not reached any decision yet on Apple's demands. But we are hopeful about the discussions that are going on.," he said.

Karnataka has already confirmed that Apple is planning to commence initial manufacturing operations in the Bengaluru's Peenya industrial area, which will "foster cutting edge technology ecosystem and supply chain development in the state, which are critical for India to compete globally."

Kumar further noted that the proposition to manufacture in India is significantly superior to what it was two years back, with the country offering scalable manpower and industry-based skills that could facilitate large-scale customized production operations. He expects Apple's contact-manufacturing partners such as Taiwan-based Foxconn Technology Group and Wistron Corporation to invest big in India.

Apple knows that India is an important market and Apple Pay is a nice side benefit that they'll gain in India.

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