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Apple’s store plans in India suffer setback
The panel comprising representatives from departments of industrial policy and promotion (DIPP) and information technology had recommended a waiver from the 30% sourcing norm on the ground that Apple\'s products were \"cutting-edge\", which allows for doing away with the domestic procurement rule.
In a setback to Apple's plans to open stores in the country, the Foreign Investment Promotion Board (FIPB) has red-flagged a panel's recommendation to relax the mandatory local sourcing norm for the Cupertino-based company to sell its products through the single-brand retail window.
The panel comprising representatives from departments of industrial policy and promotion (DIPP) and information technology had recommended a waiver from the 30% sourcing norm on the ground that Apple's products were "cutting-edge", which allows for doing away with the domestic procurement rule.
The government allows 100% FDI in the segment but companies are required to seek approval if overseas holding exceeds 49%. "There is no evidence before us to reveal that the products are cutting-edge or high-technology. Apple can open single-brand retail stores but has to meet the sourcing requirements," said a source, who did not wish to be identified.
Apple has been arguing for a waiver on the ground that it cannot meet the sourcing norms and the government had last year carved out a special policy window to allow companies with high-technology products to open stores without any local content requirement. A panel was set up to look at proposals which sought waiver. While Xiaomi and LeEco had also sought a similar dispensation, the former's proposal was not cleared and a questionnaire was dashed off to the Chinese phone maker.
At present, Apple has no manufacturing base in India and recently started exporting some chargers from the country. Apple CEO Tim Cook spent a good part of last week in India trying to get a feel of the market and also met Prime Minister Narendra Modi.
Sources said DIPP will soon be asked to prepare detailed norms to suggest what qualified as "cutting-edge or high-technology" although experts reckoned that the list could not be exhaustive and needed to evolve over time. "It needs to be specified upfront so that there is transparency," said a source.
India has emerged as one of the fastest growing markets for Apple, with the company notching up over $1 billion (around Rs 7,000 crore at current exchange rate) sales revenue in 2015. Its sales grew 76% during the quarter-ended December 2015 even as its global sales growth slowed to 0.4%.
source: techgig.com
