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Global tech companies may no longer have to source 30% from India
NEW DELHI: The government may give technology companies, such as Apple, more time to meet the local sourcing obligation and, in fact, also bring it below the current
NEW DELHI: The government may give technology companies, such as Apple, more time to meet the local sourcing obligation and, in fact, also bring it below the current 30%. All that the companies may have to do is to prove that they bring “cutting-edge” technology to India.
Meantime, a debate has started on what makes a technology “cutting-edge”.
India allows 100% foreign direct investment in single-brand retail, but companies need to take permission from the Foreign Investment Promotion Board to increase their equity above 49%. Besides— this has become a bone of contention — companies need to start sourcing locally from the first day of operations and in three years should be sourcing 30% of their ingredients locally.
A finance ministry official confirmed the second thoughts on sourcing, saying: “The DIPP (Department of Industrial Policy and Promotion) is looking to tweak the policy on sourcing.” The official explained that Apple, whose products are now sold in the country by resellers, can get up to two years to start sourcing locally, instead of having to do it from the first day, if it opens its own branded stores. “We understand that they cannot start sourcing parts for their gadgets from India immediately,” said the official, who did not want to be identified.
The finance ministry recently approved Apple’s proposal to set up its own stores in India without lowering the 30% local sourcing norm. Apple then reworked its proposal to show it would bring “cutting-edge” and “state-of-the-art” technology to India, and therefore deserved a waiver.
Top officials of the finance ministry said they had written to the commerce ministry, which houses the DIPP, to seek clarity on what makes a technology “cutting-edge” and “state-of-the-art”. “We want to know why (Chinese telephone handset maker) Xiaomi was not given a waiver of the local sourcing norm. Did they not bring in cutting-edge technology?”
The officials said the finance ministry has not received a representation from Apple explaining why its technology can be called cutting-edge.
