What you need to know
- Indian government relaxes 30% local sourcing norms for brands looking to set up stores.
- The government will instead make exceptions for brands that provide 'cutting-edge technology'.
- The move allows Apple to set up its retail stores in the country.
Apple hasn't had much to celebrate in India of late, but 2019 is becoming a turning point for the company. The Indian government has signed off on two key factories, allowing Apple to locally manufacture iPhones. That's a huge deal because India has a prohibitive 30% import tax on devices that are imported from other markets, and local assembly allows Apple to negate that tax.
Another development is around Apple's ambitions to set up a retail store in the country. India's local sourcing norms — which required a brand to source 30% of its components locally — disallowed Apple from setting up its stores here, but the government is relaxing that particular norm as it looks for an influx of cash from foreign brands.
The sourcing norms were set up to ensure a level playing field between foreign entities and homegrown players, but with investments drying up the government is looking to make a few exceptions, notably in cutting-edge technology:
To provide opportunity to such single brand entities, it has been decided that in case of 'state-of-art' and 'cutting-edge technology,' sourcing norms can be relaxed subject to government approval.
That's great news for Apple as the move finally paves the way for the company to set up its retail stores in the country. From Prabhu Ram, head of intelligence group at Cybermedia Research:
The relaxation of mandatory 30% local sourcing norm will spur the growth of the Indian economy, and will potentially help in attracting large players in the single-brand retail sector, including the likes of Apple.
That said, how long the government takes to classify Apple as a provider of "cutting-edge technology" remains to be seen. Apple was said to be scouting locations for its first retail store in the country a few months ago, so it does look like 2019 is finally the year we'll see some progress on this front.
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