Ruling in India Clears Way for Apple's Long-Awaited Retail Expansion

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The Indian government today announced a few changes to its rules on foreign direct investments (FDI) within the country, which previously required 30 percent of goods sold by a foreign company to be manufactured or produced within India (via The Times of India). The rule stagnated Apple's retail store growth within the country due to most of its products being created in China.

Now, Apple is going to be the recipient of a 3 year "relaxation" that India is introducing on its local sourcing rules, which was predicted earlier in the month, in addition to an extension of another 5 years on top of that if it can prove that the products it sells are "state of the art." India has previously exempted companies who proved such quality over the last few years, which prompted Apple to file a new application with the Indian government in May.

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Apple's plans to open stores in the country had suffered a setback as the Foreign Investment Promotion Board (FIPB), under the finance ministry, 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.

If it gets the 5 year extension, Apple could open and run retail stores in India for 8 years without needing to source products locally. Last month, Apple CEO Tim Cook met with Indian Prime Minister Narendra Modi to discuss these issues and reiterate India's importance to Apple's global iPhone market.

Currently, Apple's largest presence in India comes in the form of its Authorized Mobility Resellers program, which saw the Cupertino company partnering with third-party resellers to introduce an Apple presence in the country without directly installing full-blown Apple Stores.

Tag: India

Top Rated Comments

Douglas B Avatar
60 months ago

This is interesting and puts Apple in a position where they don't want their ego to be bruised -- hopefully it should encourage some really great Mac updates! Let's stay positive :)

? Their products are already state of the art. Sounds like business as usual to me.
Score: 8 Votes (Like | Disagree)
69Mustang Avatar
60 months ago

Not surprised and expected. That is why Tim was in India. All this delay was due to pressures from other suppliers. Don't forget, everyone bribes - not just Apple!

Yep. Other suppliers wanted Apple to comply with the same rules as everyone else. Can't say that I blame them. The 3 + 5 years seems like window dressing to me since Apple will be in compliance within 2 years. The Foxconn plant should be up and running in 18-24 months.
Score: 4 Votes (Like | Disagree)
MH01 Avatar
60 months ago

With the bribery comments right at the top with being the most liked, I at times wonder, even with the privilege of being born in the "first world" is education that rare? Having a proper read at the articles could probably fill that void, India just gave away to the Foreign Direct Investment in a lot of sectors, if one thinks this happens just "for Apple" then good for them, but they just opened up their market for defence, pharmaceuticals, airlines etc. http://timesofindia.indiatimes.com/business/india-business/Big-reforms-Government-introduces-100-FDI-in-defence-civil-aviation/articleshow/52831409.cms

In India, irrespective of the written rules, to get things done and moved along, one needs to make sure the right people benefit and sign the dotted line. We look at the situation, as corrupt and unacceptable, but that is cause we lack the knowledge of the culture, and it is us that are frankly naive. In the west, same happens, these companies lobby our governments, and we Believe we don't have corruption....not true
Score: 3 Votes (Like | Disagree)
Oblivious.Robot Avatar
60 months ago

In India, irrespective of the written rules, to get things done and moved along, one needs to make sure the right people benefit and sign the dotted line. We look at the situation, as corrupt and unacceptable, but that is cause we lack the knowledge of the culture, and it is us that are frankly naive. In the west, same happens, these companies lobby our governments, and we Believe we don't have corruption....not true

I just at times feel a little bad, I was born in India but I'm only half an Indian with British ancestry and believe me, for almost 22 years of my life, I was never a fan of that place.
But..
Things are actually changing with the new set of rules, and an updated government which is believe it or working for India against the previous "family orianted" idiots.

Now that the things are actually getting better, albeit at a slow place and that's understandable as it was horrible in the previous times with open ended corruption and still is, but even a little progress that has happened is a big deal when governing such a large populace.

India even got a better rank in the http://www.livemint.com/Politics/EcOTkT1wYfGkC0BvPbth4M/India-improves-ranking-in-global-corruption-index.html
While countries such as Brazil got worse, and it's surprisingly better score in the Indian subcontinent.

Sorry for the rant, I just idolised the western standard growing up that there is very little of India left in me, but however it's perceived over here is like a spit in the face.
Score: 3 Votes (Like | Disagree)
MH01 Avatar
60 months ago

I just at times feel a little bad, I was born in India but I'm only half an Indian with British ancestry and believe me, for almost 22 years of my life, I was never a fan of that place.
But..
Things are actually changing with the new set of rules, and an updated government which is believe it or working for India against the previous "family orianted" idiots.

Now that the things are actually getting better, albeit at a slow place and that's understandable as it was horrible in the previous times with open ended corruption and still is, but even a little progress that has happened is a big deal when governing such a large populace.

India even got a better rank in the http://www.livemint.com/Politics/EcOTkT1wYfGkC0BvPbth4M/India-improves-ranking-in-global-corruption-index.html
While countries such as Brazil got worse, and it's surprisingly better score in the Indian subcontinent.

Sorry for the rant, I just idolised the western standard growing up that there is very little of India left in me, but however it's perceived over here is like a spit in the face.

Ive been to Indiana few times for work, love it. The people are fantastic ! Though our politicians are just as bad as India ones...We just like to pretend ours are better cause it's the west lol. Money rules no matter where you are. Indian is growing very fast, I was in Hyderabad and was very impressed, India will grow fast with the middle class expanding. I look forward going back to india in the future to do more traveling .
Score: 3 Votes (Like | Disagree)
magnificent me Avatar
60 months ago

Not surprised and expected. That is why Tim was in India. All this delay was due to pressures from other suppliers. Don't forget, everyone bribes - not just Apple!

See Tim?....... That extra suitcase of cash came in handy. :p

You can take off the red dot, Tim.
Well played.

I guess Apple's suitcases of money paid off... I wonder how many people got paid off for this.

A recurrent theme anyone? A little sensitivity wouldn't hurt. Corruption has many forms, usually back door in the west.

Back to the article - major changes have happened in the Indian economy today hence apple's approval with many other major companies like IKEA. So no Tim's suitcase didn't do the trick sadly.

Apple knows the rules now. 30% local sourcing and you have 8 years to get your act together. It is simple as that. Nothing to do with Tim's invisible red tikka.
Score: 2 Votes (Like | Disagree)

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