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How Apple lost bite as India rang in profits for Chinese smartphone makers

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New Delhi, Nov 7: Software engineer Samee Alam was ready to take the big leap and buy an iPhone in this week’s Diwali festival sales, but at the last minute he opted for cheaper Chinese competitor OnePlus instead.

Alam, 27, spends hours on his phone watching shows, surfing and shopping, making him the perfect target for Apple Inc as it strives to raise sales among India’s 1.3 billion consumers.

But in a country where the average per capita income is around $2,000 a year, even the cheapest of this year’s new iPhones, the XR at 76,900 rupees ($1,058), costs twice as much as many of the alternatives.

 

Hong Kong-based Counterpoint Research says that iPhone sales are falling as a result. From three million phones in 2017, sales may sink to two million this year, according to their estimate, the first decline in four years.

More than half of those sales will come from cheaper older models, and the lack of progress in India was among problems cited by Chief Executive Officer Tim Cook when he gave a disappointing holiday outlook last week.

Even in the premium segment, smartphones that cost more than $400, Apple lagged Samsung and China’s OnePlus in the third quarter.

“I have never used an iPhone and I was keen on getting my hands on one but it didn’t make sense,” says Alam, who works for one of the raft of firms to have invested in the southern city of Bengaluru, often called India’s Silicon Valley.

“I look for storage, camera and processor in phones and cheaper alternatives like OnePlus are more value for the money.

The new iPhones cost almost 100,000 rupees – I can get three good phones for that price or even a decent gaming laptop.” Solid Mac sales and the high unit price of iPhones meant Apple’s total revenue of $2 billion in India last year was still double that of OnePlus, which only sells mobile phones. But Counterpoint’s data says that gap will also shrink.

OnePlus’ India head Vikas Agarwal told Reuters this week that 10-15 percent of new customers in recent months have been defectors from Apple, suggesting even some loyalists are opting out of upgrading their handsets.

Apple’s problems go beyond price.

The company, facing down a handful of regulatory headaches, lost some of its top executives in India at the start of this year.

An Apple spokesman said the departures had nothing to do with the company’s performance, but people familiar with the matter told Reuters that the departures were likely linked to the company changing its distribution system. Apple has cut the number of distributors in the country to two from five.

The sources, who declined to be identified because they have business relationships with Apple, also said company veteran Michel Columb is still working on solidifying business relations since taking control of the Indian operation in December.

Apple declined to comment further.

Prime Minister Narendra Modi’s government has sought to drive electronics producers into manufacturing locally by steadily moving tariffs up the supply chain from simple phone cases to sophisticated chipsets and boards.

Along with local firms like Lava, global smartphone giants including Samsung Electronics Co Ltd, Oppo and Xiaomi Corp have responded aggressively, investing millions of dollars in plants around Bengaluru and Delhi tech hub Noida.

Apple is the only major player which does not manufacture phones in the country and it only assembles two low-cost older models through Wistron Corp in Bengaluru.

Industry experts say as a result the company still imports about 70-80 percent of its phones. That results in high import duties, which in turn make the phones expensive.

In the United States, the basic iPhone XR model costs $749 or roughly 54,400 rupees, only two thirds of its retail price in India. Beyond that, while U.S. phones are subsidized under deals with wireless carriers, Apple’s phones in India are not.

“Apple doesn’t have enough confidence … in the Indian manufacturing system right now, to set up plants and move some of the manufacturing out of China,” said analyst Navkendar Singh of tech consulting firm IDC.

“In the process they are losing around 15-20 percent of their tax incentive … which they could have passed on to the consumer.”

Diwali, the Festival of Lights, is peak selling time for electronics in India, but the Apple-licensed store in one of Bengaluru’s big shopping malls was deserted this past Saturday.

“Features of the emerging phones are very similar to an iPhone,” says salesman Aejaz Ahmed, adding volumes have fallen in the past few months. “It is very difficult to make out the difference from a distance because they even look so alike.” Sales staff at several stores in Bengaluru and nearby Chennai pointed to the launch this year of the latest OnePlus phone as a major problem for the U.S. phonemaker. At 37,999 rupees, the Chinese company’s 6T is half the price of the XR.

The result, says Neil Shah, from Counterpoint, is that Apple’s user base in India is set to decline about 10 percent to nine million users this year. That compares to an estimated 436 million Android users.

“If your user base is declining, you are losing grip on the market,” he says. “The new customer base is not coming.” (Reuters)


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Income Tax return processing time to reduce from 63 days to just 1 day

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Mumbai:The Union Cabinet approved an integrated income-tax e-filing and centralised processing centre (CPC) portal, which will reduce the return processing time from 63 days to just one day. The new portal is also expected to process the refunds within one day of filing of tax returns, in huge relief for taxpayers. However, one will have to wait for 18 months to see its launch.

“Earlier, taxpayers would face troubles because of delay in refund processing and the CBDT used to spend a lot of money every year as interest on pending refunds, which will be history now,” Union minister Piyush Goyal told reporters after the Cabinet meeting here.

Last month, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra had said a simplified return form and process would be put in place soon in which the department would process the self-declaration made by the taxpayer. The new Rs 4,241-crore project will incorporate these changes.

 

“This is a laudable initiative and will go a long way to ease tax compliance, and enhanced experience for taxpayers. However, the real success of this will be measured when it brings ease to a common man and is accompanied by changes in the culture of the tax authorities at the operational level,” said Neeru Ahuja, partner, Deloitte India.

Currently, the e-filing portal and the CPC work separately. While e-filing is being managed by Tata Consultancy Services (TCS), the CPC is run by Infosys.

In the bids invited by the government, Infosys emerged as the lowest bidder and it would develop the ITR-CPC 2.0 project in 18 months from now, Goyal said.

Under the new system, Infosys will handle end-to-end solution — from e-filing to return assessment to refund processing. The CBDT and Infosys would work in a revenue-sharing model, sources in the know said.

Goyal said ramping up scrutiny was not the mandate of the new portal. Currently, about 0.3 per cent of the I-T returns are scrutinised, he said. The system intends to resolve taxpayer grievances as well as tax demands from the CBDT faster and equitably, he said.

“The decision will ensure horizontal equity by processing returns filed by all categories of taxpayers across the country in a consistent, uniform, rule driven, identity blind manner. This will assure fairness in tax treatment to every taxpayer irrespective of their status,” a government release said.

But even under the new ecosystem, only those applications which are clean would have the chance of getting processed in a day, sources said.

About 23 crore I-T returns have been processed, along with Rs 2.62 trillion worth of refunds, till September 2018 cumulatively. Of this, refunds worth Rs 1.83 trillion have been processed in 2018-19, said Goyal.

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Lenders considering resolution plan for Jet Airways: SBI

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Mumbai: State Bank of India (SBI) on Thursday said lenders are considering a resolution plan for Jet Airways to ensure long-term viability of the debt-laden company.

The SBI statement comes a day after the crisis-hit airline said discussions were “progressing well” with stakeholders on a comprehensive resolution plan that also contemplates equity infusion and consequent changes in its board of directors.

There are rising concerns over financial health of Jet Airways, whose shares have also taken a beating at stock exchanges.

 

“We would like to state that lenders are considering a restructuring plan under the RBI framework for resolution of stressed assets that would ensure a long-term viability of the company,” SBI said in a statement.

It said the restructuring plan for the cash-strapped airline would need approval from boards of lenders.

“Any such plan would be subject to approval of boards of the lenders and subject to adherence and clearance, if required, from the RBI and/or Sebi (takeover code, ICDR regulations.) and Ministry of Civil Aviation and in compliance with all regulatory prescriptions,” the statement said.

Shares of the airline are trading 4.24 per cent lower at Rs 259.50 apiece on BSE.

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NGT slams Volkswagen for not depositing Rs 100 crore as per its 2018 order

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New Delhi: The National Green Tribunal (NGT) slammed German auto major Volkswagen for not depositing Rs 100 crore in accordance with its November 16, 2018 order and directed it to submit the amount within 24 hours.

A bench headed by NGT chairperson Adarsh Kumar Goel took strong exception to the non-compliance of its order by the automobile giant and asked it to give an undertaking that it will submit the amount by 5 PM Friday.

“Why have you not complied with our order when there is no stay. We will not give you any further time,” the bench, also comprising Justice S P Wangdi, said while asking Volkswagen to submit an affidavit of compliance after deposit.

 

The tribunal deferred the matter for hearing after it was informed that the Supreme Court is also seized of the issue.

On November 16 last year, the tribunal had said that the use of ”cheat device” by Volkswagen in diesel cars in India leads to inference of environmental damage and had asked the German auto major to deposit an interim amount of Rs 100 crore with the Central Pollution Control Board (CPCB).

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