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Indian Government Ruling Appears to Clear Way for Apple Retail Stores

Indian Government Ruling Appears to Clear Way for Apple Retail Stores

The on-again, off-again idea of Apple opening company owned retail stores in India appears to be on-again, as the Indian government on Monday announced some changes to its rules on foreign direct investments in the country. (Via The Times of India.)

Indian Government Ruling Appears to Clear Way for Apple Retail Stores

The barrier blocking Apple’s efforts to open retail stores in India has long been the FDI rule requiring at least 30% of the goods sold in such a store had to be manufactured or produced in India. The Cupertino firm has no production facilities in the country, so that was always the sticking point whenever the company discussed a retail expansion to the country.

Today, the Indian government has announced a 3 year “relaxation of the local sourcing rules, with an additional 5 year extension for products that are “state of the art.” India has previously granted such a 3 year exemption to companies that have proven their products are “state of the art,” prompting Apple to file a new application in May.

However, those plans faced a setback recently, as India’s  Foreign Investment Promotion Board struck down a panel’s recommendation to relax the local sourcing requirement for Apple.

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.

With the initial 3 year exemption, along with the added 5 years allowance if it can prove “state of the art” for its products, the iPhone maker would have 8 year to begin sourcing some of their products in India. Three years could be enough slack for Apple, as its largest production partner, Foxconn, has plans to bring a $10 billion construction plant online in the country, with an estimated timeframe of breaking ground to production of a mere 18 months.

Currently, the company’s major retail presence in India is in the form of “Authorized Mobility Resellers,” which is a program where Apple partners with local third-party resellers to offer its products in a country without Apple retail stores.

Today’s report does not in any way confirm Apple will indeed be allowed to open stores in India, merely that the company would likely benefit from today’s ruling. No official announcement from the Indian government or Apple has been released concerning the approval situation. We will keep our eye out for any such announcement.

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