Telecom industry may benefit from Apple stores

The Department of Investment Policy and Promotion (DIPP), the nodal agency for such policy moves, is learnt to be open to relaxing the condition that stipulates companies to source at least 30% of their components, or merchandise, for being eligible to set up company-run retail stores in India.

The entire telecom industry may benefit with Apple’s plans to open its signature stores in India with the government mulling the option of waiving of local sourcing conditions for overseas mobile phone manufacturers.

Apple chief Tim Cook during his recent visit to India.(AP)

The Department of Investment Policy and Promotion (DIPP), the nodal agency for such policy moves, is learnt to be open to relaxing the condition that stipulates companies to source at least 30% of their components, or merchandise, for being eligible to set up company-run retail stores in India.

The California-based company, whose CEO Tim Cook was in India recently, has sought easing of this norm to enable it to open the its iWorld stores that sell iPhones, iPads and its other proprietary products.

Two weeks back, the Foreign Investment and Promotion Board (FIPB), the nodal agency that vets overseas investment applications, ruled that Apple can open its stores only if it meets the 30% local sourcing conditions.

According to the current rules, a panel in the DIPP first approves a company’s application, and then sends it to the FIPB for a formal clearance.

The government can relax mandatory local sourcing norms for single-brand retailing if it is convinced that the company’s cutting-edge production technology requires specific components that cannot be sourced locally.

The finance ministry, however, is of the view that relaxing these conditions would go against the government’s flagship ‘Make in India’ initiative, a source, who did not wish to be identified, told HT. Launched in 2014, Make in India is an umbrella plan to turn the country into a manufacturing powerhouse.

India has been hard selling this initiative to the overseas investors, such as Xiaomi and Foxconn among others, who have already announced plans to make phones and gadgets in India besides opening dedicated stores.

According to the sources, the finance ministry is of the view that an exemption of the local sourcing norms only for Apple would send wrong signals to other investors, which have already detailed out their India-specific rollout plans.

While having a re-look at the proposal, North block in the recent discussions with the DIPP said that if players such as Xiaomi can make in India then why not Apple?

According to sources, the finance ministry while rejecting Apple’s request for a waiver in a letter to the DIPP said: “Apple may be allowed to open stores, but it should comply with the local sourcing norms. Secondly, the DIPP should soon come out with a clear definition of cutting-edge technology and state-of-the-art technology terms under which the exemption is sought. Thirdly, in case, the industry is not yet developed in India citing which Apple wants the exemption, then it can be looked at only for a year, or so, till the time the industry picks up, but in this case the entire industry should be given this exemption and not just one player.”

Sources added: “the waiver is against the country’s and the DIPP’s flagship program Make in India, which talks about increasing telecom manufacturing and obviously creation.”

Finance minister Arun Jaitley, too, has argued it by saying: “When you offer such a large market to a foreign supplier, it’s only fair that you expect him to create some jobs in India. Otherwise, we will become a complete nation of traders only.”

It was only last week when commerce minister Nirmala Sitharaman had said that her department is in talks with the finance ministry to reconsider Apple Inc’s foreign direct investment (FDI) proposal that seeks a waiver from the country’s local sourcing rules.

Apple currently has company-owned stores across the world, including the US, the UK and China. It sells in India through distributors, such as, Redington, Ingram Micro and Bettel.