Government relents on Apple, food security issues

The Narendra Modi government that had vowed to make India a global electronics manufacturing hub by encouraging local production and ensure markets for India's poor farmers has now backtracked on both. In a reversal of its earlier stance, the commerce ministry now says it is keen to welcome iPhone maker Apple and forego its demands on agriculture at the World Trade Organisation.

The government will support iPhone maker Apple to set up manufacturing facilities in the country and is awaiting a formal proposal from them, commerce and industry minister Suresh Prabhu has said, adding that the government is awaiting a formal proposal from the company.

During various media interactions ahead of the World Trade Organisation's (WTO) ministerial meet to be held in Buenos Aires, Argentina next month, the commerce minister also said India will not insist on a permanent solution on public stockholding for food security since it already has an indefinite interim solution in place.

India is not going to make securing a permanent solution on public stockholding for food security a prestige issue at the 11th WTO ministerial conference (MC11) at Buenos Aires next month, The Indian Express quoted Prabhu as saying.

In an interview with news agency PTI, the minister said the government had sought details of Apple's investment plans and the estimates of job creation from its proposed manufacturing facility.

"Let us get a good proposal from them...We will be very happy to receive Apple, one of the top brands in the world. We are willing to find out if there is any difficulty they may face. We will be more than happy to resolve that difficulty. So we will await a formal proposal," the report quoted Prabhu as saying.

He also said that the Centre is willing to call all state chief ministers who are willing to give them the best deal.

The Cupertino-based iPhone and iPad manufacturer had sought certain concessions, including reduction in customs duties on import of the devices in completely-knocked-down (CKD) form and exemption from 30 per cent local sourcing, for setting up assembling facilities in the country.

Apple India had sought concessions, including duty exemption on manufacturing and repair units, components, capital equipment and consumables for smartphone manufacturing and service/repair for a period of 15 years.

Apple has no wholly-owned store in India and sells its products through distributors such as Redington and Ingram Micro

Meanwhile, in his interview with The Indian Express, Prabhu even said India's insistence on a permanent solution to the matter was ''a mistake'' since India already has an indefinite interim solution in place.

''There is a solution already available for public stockholding. This is something (where) we are making a mistake. We don't have to worry about anything. They have already agreed that this will go (on) indefinitely,'' the trade minister said.

''But if something better comes up, we will be more than happy to have it. This is something on the agenda. But what we have already got is a very good solution,'' Prabhu added.

Obviously, India seems to have little hope on MC11, given growing opposition from developed countries to demands of developing countries with huge populations of poor farmers and the push for faster implementation of trade facilitation measures by deleloping countries.

Under the previous commerce minister Nirmala Sitharaman, India had been insisting that WTO deliver on its promise made during the Bali ministerial conference in 2013 that a permanent solution will be concluded in four years' time, which is, by MC11.

Under the WTO rules, developing countries such as India need to limit their public procurement of foodgrains such as wheat and rice to within 10 per cent of the value of the crop.

After India enacted the National Food Security Act, 2013, which aimed to provide subsidised foodgrains to approximately two-thirds of its 1.3 billion population, the demand for public procurement increased significantly.

At the Bali ministerial conference in December 2013, India secured a so-called ''peace clause''. Under it, if India breaches the 10 per cent limit, other member countries will not take legal action under the WTO dispute settlement mechanism. However, there was confusion over whether the temporary reprieve would continue after four years.

If India relents on the food security issue, developed countries will get to secure their farm subsidy policies while dismantling India's farm support programmes and at the same time ensure a market for their produce in India through trade facilitation measures.