Contract electronics maker Inventec Corp (英業達) has set up a plant in India, but has not started operations due to a taxation issue involving one of its major clients and the local government.
The company, whose clients include Apple Inc and Xiaomi Corp (小米), yesterday said it has decided to leave the plant idle until the issue is resolved and it is seeking other clients to place orders.
“We can not start operating the plant while a major client has taxation issues with the local government,” an Inventec official, who declined to be named, told the Taipei Times.
The official said the about US$10 million plant was set up in India’s Chennai in Tamil Nadu state in the second quarter of last year to help one of Inventec’s US notebook computer clients meet Indian Prime Minister Narendra Modi’s “Make in India” policy.
The company initially installed one production line for the notebook client, the official said.
However, at the end of last year the US client decided to suspend the manufacture of products at the plant due to the Indian state government’s revised tax policy, the official said.
Currently, there are not sufficient orders from other clients to support the full operation of the plant, as most clients are cautious about the unpredictable global economy, the official said.
The official said that the company does not have plans to give up the Chennai plant, rather it is seeking other clients to jointly explore business opportunities, she said.
An industry source, who refused to be named, as the company is in the final stage of deciding whether to set up a manufacturing plant in India, said complicated tax policies in different Indian states is one of the key issues stalling its decision.
“A main issue in India is that each state has different tariff policies and regulations. It is complicated if you want to manufacture products in this state and sell them in other states,” the source said by telephone.
Taiwan’s Department of Investment Services said tax policies, infrastructure and labor efficiency are the three main reasons Taiwanese manufacturers entered the Indian market.
The cultural and language differences and the instability of electricity supply raise the bar for Taiwanese manufacturers to invest in India, department Director-General Vivian Lien (連玉蘋) said.
“Although the investment environment in India is improving, it is still unfriendly to investors, compared with other Southeast Asian countries,” Lien said by telephone.
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