New Delhi, April 24: Apple, which is likely to start assembling the iPhone SE from June, as well as other domestic and foreign manufacturers are lobbying the government for a tax holiday of 5-10 years to set up factories here in preference to locations such as China and Taiwan.

California-based Apple, in talks with the department of electronics, also wants the relaxation of a rule that mandates 30 per cent local sourcing for FDI in single-brand retail. Officials said "we are mulling over the representations which we have received".

The Indian Cellular Association, whose membership ranges from Sony to Lava, Micromax and Gionee, has already sought a 10-year tax holiday which it says is necessary to scale up production.

"Currently most of these firms assemble their smartphones from imported parts, using the simplest of screwdriver technology here. We want to change that. We would like most investment in making parts here, including chips," said officials.

They said Apple is likely to start assembling the iPhone SE at contract manufacturer Wistron's factory in Bangalore from June. However, to scale up this production and use another of its main contractors - Foxconn - Apple wants more concessions.

Local assembly could result in 15 per cent savings compared with imports. However, savings would be much higher at 25-30 per cent if more parts are made in the country.

But this requires huge investments in factories and training of workers, possible if India offers terms comparable with other competing markets such as Vietnam.

Vietnam's mobile manufacturing industry is estimated to be 7-8 times bigger than that of India. China the largest manufacturer of mobile phones accounts for the production of half of the world's phones.

A plan to encourage domestic manufacturing has been in the offing, and successive budgets have done some amount of duty rejig to make the country an attractive base.

Officials said handsets bought by government departments and defence forces will compulsorily require indigenous manufacturing in the future as part of the proposed "Buy Indian" rules.

The aim of the tax changes is to make the imports of fully built handsets costlier to force at least local assembly.

Component duties, too, are being raised to force component manufacturers to shift base. Top finance ministry officials point out that electronics is the second-top import item.