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Apple may be exempt from local sourcing norms, hikes iPhone prices

Government is likely to exempt iPhone and iPad maker Apple from mandatory local sourcing rule, a move which would pave the way for tech giant opening single-brand retail stores in the country at a time when the company has just announced a hike in prices of iPhones to increase sales of its new phone iPhone SE

tech Updated: Apr 25, 2016 14:59 IST

Government is likely to exempt iPhone and iPad maker Apple from mandatory local sourcing rule, a move which would pave the way for tech giant opening single-brand retail stores in the country

Government is likely to exempt iPhone and iPad maker Apple from mandatory local sourcing rule, a move which would pave the way for tech giant opening single-brand retail stores in the country at a time when the company has just announced a hike in prices of iPhones to increase sales of its new phone iPhone SE.

The company had given a detailed presentation to a committee headed by DIPP Secretary Ramesh Abhishek on April 19, on its products, technology, innovations and camera.

By early next week, the Department of Industrial Policy and Promotion (DIPP) would send the proposal for final approval to Finance Ministry, sources said.

“The panel has looked into the detailed proposal. The committee feels that it is a fit case for exemption of the mandatory sourcing norms,” they added.

The US-based company has sought approval from the government on setting up single-brand retail stores in the country.

Read more: Poor iPhone SE sales prompt Apple to hike prices by 29%

As per the foreign direct investment (FDI) norms, the government may relax the mandatory local sourcing norms for entities undertaking single-brand retailing of products having state-of-the-art and cutting edge technology and where local sourcing is not possible.

The government had set up a committee to decide whether a product is state-of-the-art and can be eligible for exemption from the mandatory local sourcing applicable for FDI single brand retail trading.

At present, 100 per cent FDI is permitted in single-brand retail sector but companies are required to take FIPB permission if the limit exceeds 49 percent.

Read more: Yes, Apple Stores are finally coming to India

The company sells its products through Apple-owned retail stores in countries including China, Germany, the US, the UK and France. Apple has no wholly-owned store in India and sells its products through distributors such as Redington and Ingram Micro.

Chinese smartphone maker Xiaomi has also submitted an application to open stores in the country.

Meanwhile, Apple might have been forced to hike the price of iPhone 6 by 29 percent in the country as the company’s new smartphone, iPhone SE, saw a poor response selling only a few thousand units.

The company was on a discount-offering spree for the period of January-March 2016 and finally deceided to withdraw them in order to promote the sell of the SE.

“It was felt that SE, which was criticised for having a ‘high price tag’, will not be able to see much traction if prices of bigger-sized iPhone 6 and 6S devices are not corrected. So, the decision was taken to revise the price upwards,” TOI quoted a source as saying.

Currently, the 16GB 4-inch iPhone SE sells at Rs 39,000 while a similar specked (16GB) version of iPhone 6 is available at Rs 31,000 and 6S at Rs 40,500. “After the revision, iPhone 6 costs Rs 40,000 and 6S comes for Rs 48,000. We are trying to build a healthy buffer,” the source added.

Read more: Not another iPhone SE review: You might just fall for the small screen

The current decision will also see a 22 percent rise in price for the iPhone 5S which was selling at Rs 18,000. The revised price is expected to be around Rs 22,000. Apple has also come out with corporate offers and EMI plans to push sales.

(With inputs from PTI)