There’s finally some respite for Apple, from one of its only growth-showing markets. A three-member Indian Government panel, headed by DIPP Secretary Ramesh Abhishek, has waived the mandatory 30 percent local sourcing condition for Apple to open a single-brand retail store in India.
Earlier this year, Apple proposed government to let-go 30% local sourcing condition. Now, the committee has approved Apple’s proposal to open a chain of stores in the country, waiving the 30% condition. The reason for waiving the 30 percent local sourcing conditions is said to be the cutting-edge technology Apple would bring to the country. A source aware of the matter said:
The committee has found that the company’s products are cutting edge technology and state-of-the-art. It has recommended to exempt them from the local sourcing norms.
The company is now just a step away to get the final decision on the matter. The Department of Industrial Policy and Promotion (DIPP) would soon send the proposal for final approval to the Finance Ministry. Once Arun Jaitley gives approval, Apple can go ahead and launch its stores in India.
Apple currently has its own retail stores across the world, including the US, the UK, Germany, France, China and Japan. In India, it sells its products through exclusive reselling arrangements with chains such as Imagine and iStore.
The government has permitted 100% FDI in single-brand retail sector. While up to 49% FDI is allowed through the automatic route, FDI above 49% is also allowed with approval of the Foreign Investment Promotion Board.
For FDI beyond 51%, it is required that 30% of the value of goods be sourced from India. However, In November 2015, India scrapped the condition of 30% local sourcing for overseas companies seeking to invest more than 51% equity in the single-brand retail segment, if it meets certain other conditions.
Xiaomi has also applied to open single-brand retail stores in India and has sought permission from the Government to forego the 30% sourcing norm for a range of its products including Wi-Fi amplifiers, Bluetooth speakers and power banks.
The committee will soon be deciding whether Xiaomi meets the condition of “cutting edge technology” to open single brand outlet in India without mandatory domestic sourcing.
Apart from Apple and Xiaomi, other companies including Gionee and LeEco has also asked for the permission to set-up their single-brand retail stores in India.