NEW DELHI: The Foreign Investment and Promotion Board (FIPB) — the nodal agency for clearing investment proposals by overseas companies — has cleared Apple Inc’s plans to set up retail outlets in the country, but said the iPhone maker must comply with 30% local sourcing rules.
The move comes a week after Apple CEO Tim Cook made his first visit to the country, to capitalise on its growth prospects, and in the face of slowing sales in China, the company’s biggest overseas market.
When contacted, an Apple spokesperson refused to comment on the development.
The California-based company had applied for a waiver of the mandatory sourcing norms, and there was widespread speculation that the government would accept its proposal.
Apple currently has Apple-owned stores across the world, including the US, the UK and China. The sourcing norm has been a hurdle for Apple in India, since the market does not have enough vendors to help it meet the norm. It sells in India through distributors, such as, Redington, Ingram Micro and Bettel.
According to Indian rules, a DIPP secretary-led panel first approves a company’s application, and then sends it to the FIPB for a formal clearance. Reports earlier said that the DIPP had approved Apple’s proposal to open retail stores in the country without the 30% sourcing rider.
The government can relax mandatory local sourcing norms for companies, which undertake single-brand retailing of products and have state-of-the-art and cutting-edge technology, and where local sourcing is not possible.
“Apple’s case for waiver of sourcing norms came to the finance ministry six days back, but was not justifiable. They (Apple) could not prove through enough merit that the technology they want to sell is cutting-edge technology and state of the art. But they can open stores if they meet the norms,” sources said.
The finance ministry has also asked the Department of Industrial Policy and Promotion (DIPP) to come up with a policy explaining cutting edge, and stateof-the-art technology, sources said.
This is the second blow for Apple, whose application to import refurbished phones was earlier rejected by the Directorate General of Foreign Trade.
The company recently reported its first-ever decline in iPhone sales, and its first revenue drop in 13 years. Cook had said that India presents a “really great opportunity” for Apple.
Chinese mobile device makers Xiaomi and LeEco have also applied for the 30% sourcing waiver, and the government’s decision on Apple’s proposal will now bring the spotlight on them .
The Centre currently permits 100% FDI in single-brand retail, but beyond 49%, a company needs to approach the FIPB.