The Indian government has opened the gates for global brands like Apple to set up shop in the country and do that without any stringent local-sourcing norms in the initial phase at least.
These changes were announced on 28 August by Piyush Goyal, Union Minister of Railways and Commerce & Industry. The latest move is likely to have pleased companies like Apple, who’ve had to battle the country’s regulations to let them to setup stores and sell their products directly to consumers.
Tim Cook and company have done multiple discussions with the Narendra Modi government over the past few years, but they’ve got little incentive to date. But that is definitely going to change, hastening Apple’s plans of manufacturing in India.
The new norms allow Apple to set up physical retail stores in the country, but before that, Apple can start selling its iPhone, iPad and MacBook products via the online channel.
The present policy requires that SBRT entities have to operate through brick and mortar stores before starting retail trading of that brand through e-commerce. This creates an artificial restriction and is out of sync with current market practices. It has therefore been decided that retail trading through online trade can also be undertaken prior to opening of brick and mortar stores,Press Information Bureau statement on FDI changes
Till now, Apple was only allowed to list its products on its Indian website, but very soon (most likely with the iPhone 11 series), the Cupertino-based giant can sell them as well.
Having said that, the new norms stipulate that the likes of Apple will have to setup brick and mortar stores within two years after starting online sales. The Indian government is hopeful that online sales will lead to creation of jobs in logistics, digital payments, customer care, training and product skilling as well.
Easing Local Sourcing Conditions
In addition to this, Apple and other global brands have been allowed to locally source an average of 30 percent of the raw materials during the first five years of operation. Currently, any brand with more than 51 percent in FDI is allowed to operate with 30 percent locally sourced components from day one, but that has been relaxed as well.
The extant FDI Policy provides that 30 percent of value of goods has to be procured from India if SBRT entity has FDI more than 51 percent. Further, as regards local sourcing requirement, the same can be met as an average during the first 5 years, and thereafter annually towards its India operations.Press Information Bureau statement on FDI changes
Apple Thanks Modi Government
These changes have been appreciated by Apple. It says it is looking forward to set up retail stores, which will take some time, of course.
We appreciate the support and hard work by Prime Minister Modi and his team to make this possible and we look forward to one day welcoming customers to India’s first Apple retail store. It will take us some time to get our plans underway and we’ll have more to announce at a future date.Apple to The Quint
Earlier this year, reports suggested that Apple has chosen Mumbai as its first retail destination in the country, which is likely to come up by end of 2020.
We love our customers in India and we’re eager to serve them online and in-store with the same experience and care that Apple customers around the world enjoy.Apple to The Quint
Customers will be hoping to get the same premium experience in the country, which the company has dished out in other markets and Apple is eager to live up to its billing.
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