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Comment by justinlardinois | Hacker News Reader

> Apple was expected to receive an exemption from the rule, earning a recommendation from country's Department of Industrial Policy and Promotion, but the ministry of finance has decided Apple's products do not fall into the cutting-edge technology category. A source told Reuters Apple did not provide enough material to justify the exemption.

So did Apple just submit a crappy application? Or is the ministry not following the spirit of the law?

I won't pretend for a moment that I know anything about Indian law though, so I have no idea who's to blame here.

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How do Apple's products qualify as "cutting-edge technology"? Or, phrased differently, would Samsung also qualify? HTC? LG?

What differentiates "cutting-edge" from "just another widget" in the consumer electronics sector?

I know people who work as "fixers" specializing in navigating such government restrictions and bureaucracy for local and foreign companies in India.

It is more likely that the real reason for Apple's rejection is the whim of some high level bureaucrat ("IAS officer"). It may not even be corruption, even righteous bureaucrats are often stupid. The amount of red-tape in India is astounding.

On the contrary, my guess would be that this decision was taken at the highest political levels, and I applaud this decision. I read that the govt. set up a small committee of bureaucrats which recommended a waiver and I was hoping for this outcome. This would hopefully incentivise Apple to move at-least some of their assembly to Foxconn India. We need all the jobs and economic activity we can get.

I don't know, forced Import Substitution Industrialization (https://en.wikipedia.org/wiki/Import_substitution_industrial...) hasn't worked very well around the world so far.

Worthy quote from that article:

"While import substitution policies might create jobs in the short run, as domestic producers replace foreign producers, economics theory shows that in the long run output and growth will be lower than it would otherwise have been. This is because import substitution denies the country the benefits to be gained from specialisation and foreign imports. The law of comparative advantage shows how countries will gain from trade. Moreover, protectionism leads to dynamic inefficiency: Domestic producers have no incentive from foreign competitors to reduce costs or improve products. Import substitution can impede growth through poor allocation of resources, and its effect on exchange rates harms exports."

I'm not sure how that would apply to veblen goods when the status they confer is tied up in actually not being produced locally.

Interesting point. I wonder how much of an economic impact these goods have? (Ie if they exist, do they matter?)

I assume the law is for products that can not be produced at all in India. There is nothing Apple does in China that it can't do in India. All the really high tech components come from Korea, Taiwan, etc.

Free trade aside this is a smart move for India: Apple has saturated the markets in the west and needs Asian consumers for future growth. It's been shut out of China despite being based there from a production standpoint. If India can force Apple to shift production to India in exchange for access to its consumers that would be a great coup.

Shut out of China? How so?

It's been a few years since last I was in China, but I remember visiting several Apple flagship stores and seeing iPads and iPhones everywhere on the street.

Not shut out completely, but the government is pushing back: http://www.nytimes.com/2016/04/22/technology/apple-no-longer...

Discussed at https://news.ycombinator.com/item?id=11549697

> How do Apple's products qualify as "cutting-edge technology"?

If Apple does not qualify as "cutting-edge technology" then what does?

If a store is selling to consumers, it's inherently going to be not at the very edge of development.

If Apple can't be approved for this exemption, this exemption makes no sense.

The rule is for cutting edge technology that is not available locally, which is a key stipulation.

We're talking about device manufacturing, which isn't exactly scarce in APAC. Apple already manufacturers chargers and other items in India.

IKEA applied and lost. LeEco and Xiaomi have also applied, and my guess is they won't get it as well on the same grounds.

If Apple does not qualify as "cutting-edge technology" then what does?

When I think cutting-edge, I usually think highly specialized medical or military tech - things that a only a small set of people can design/build.

But, it is a pretty flimsy phrase and could be open to abuse. Which is why I asked if other consumer electronics companies have succeeded/failed to obtain a waiver.

> When I think cutting-edge, I usually think highly specialized medical or military tech - things that a only a small set of people can design/build.

Sure, that is the absolute cutting edge.

But you don't need retail stores to sell specialized medical or military technology.

I read "cutting edge technology" as "computers, phones, and other sophisticated electronics." It would be helpful if the article mentioned if the Indian government provides a concrete definition.

the cutting edge of technology is always moving, moreor less tautologically, they could give better guidelines (i haven't read them they might actually be very good guidelines already) but there isn't going to be a concrete definition.

cutting-edge == the right people get paid

Hence the visit from the ceo of apple to the pm.

I'm going with bribery. Some Indian officials just made a good chunk of change.

Not saying that bribery won't happen in this kind of cases, but it wouldn't definitely happen with a company as big as Apple. Especially not when Tim Cook met Modi regarding expansion in India.

Or, more likely, didn't make the chunk of change they wanted ...

India is heavily invested in protectionism, that's the primary issue, the exemption is in place because it was clear no one was going to make smart phones there.

OnePlus manufactures in India.

http://wap.business-standard.com/article/companies/oneplus-p...

Well, given Micromax exists and has manufacturing (and HQ) in India, now Indian government can say that smartphones are not cutting-edge high-tech per se.

Just like Apple in China, I'm betting all Micromax does in India is assemble phones from high-tech subparts that were made in Korea, Taiwan, and the United States.

Not sure whether this is relevant because I'm not sure exactly what counts towards the "30%" figure.

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