Apple may finally get clearance for stores in India

India has liberalized rules for foreign companies to set up retail stores

Apple may finally get clearance to set up its stores in India, following the Indian government’s decision Monday to liberalize rules requiring local sourcing of some products sold in foreign-owned, single-brand stores.

The iPhone maker operates in the country through third-party owned, exclusive stores run by partners like Imagine, in addition to selling through retail chains and online e-commerce websites. But Apple considers the design and layout of its own stores a key element of its branding and retail experience.

The Indian government, in a statement Monday, said the local sourcing requirements, which had been a hurdle for Apple to get clearance for its own branded stores, have been relaxed for up to three years. The new rules include a relaxed “sourcing regime” for an additional five years introduced for “entities undertaking single-brand retail trading of products having ‘state-of-art’ and ‘cutting edge’ technology."

The government could not be immediately reached for details of the new scheme.

Local authorities had earlier required that foreign-owned, single-brand retailers source 30 percent of their products locally but had indicated it could waive that rule for vendors of hi-tech products. Apple had applied for such an exemption but the proposal was opposed by the country’s Finance Ministry.

Apple will probably now apply under the new rules, which would give it a better chance to get clearance for the stores. The company could not be immediately reached for comment.

India’s Commerce and Industry Minister Nirmala Sitharaman said in May that her ministry did not oppose a waiver of the retail rule to high-tech companies like Apple and would discuss the matter with the Finance Ministry. The new rules appear to be a compromise worked within the government, in which some sections are opposed to trading only in imported products and in favor of requiring their local manufacture.

A number of smartphone vendors have started making their products in India and Apple's CEO Tim Cook is said to have spoken of the "possibilities of manufacturing and retailing in India" during a recent meeting with India's Prime Minister Narendra Modi. The company has not, however, announced plans for making phones in India.

Another Apple proposal, to import and sell low-cost refurbished phones in India to price-sensitive users, has not been cleared. Sitharaman had said her ministry was not in favor of the company’s plans for the import of the refurbished phones. The proposal had earlier been criticized by the Environment Ministry, which was worried that the phones would be close to their end of life and pose a recycling problem.

Apple sees India as a big opportunity for the company as its iPhone sales grew 56 percent year-on-year in the fourth quarter in the country, though from a small base and mainly older products, even as its worldwide phone sales dipped.

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John Ribeiro

IDG News Service
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