Saritha Rai, Bloomberg
Bengaluru, 20 June 2016
Apple Inc. may be closer to opening stores in India after the government eased onerous local sourcing requirements on retailers.
world’s second-most populous country on Monday announced the easing as
part of a raft of measures intended to boost foreign direct investment
and expand the leeway afforded multinational corporations. It loosened
policies that require retailers to source at least 30 percent of their
components locally before they can set up shop.
Apple is pushing
to increase its share of the world’s fastest-growing major smartphone
market as device sales slow elsewhere. Chief Executive Officer Tim Cook
visited the country for the first time in May and met with Prime
Minister Narendra Modi to outline his ambitions for the burgeoning
Under the new regime unveiled Monday, single-brand
retailers have a three-year grace period in which they can operate
stores, before they have to comply with the local sourcing requirement.
Companies that can show they are selling state of the art or cutting
edge technology can benefit from a relaxed local sourcing regime for
“another five years.”
The government hasn’t ruled on whether
Apple meets the cutting edge criteria. Apple didn’t respond to an
e-mail seeking comment on the government’s decision.
now have to apply anew for permission to open its first stores in
India, Commerce Minister Nirmala Sitharaman told reporters Monday. The
Cupertino, California-based company has used flagship stores in New
York, Tokyo and Shanghai to promote its products and boost sales, but
in India it sells through partners such as Redington India Ltd. as well
as the retail units of Indian conglomerates Tata Group and Reliance
rules give Apple a window to build up a credible brand and gives the
company a chance to build up internal capability and familiarity with
the supply base,” said Devangshu Dutta, chief executive officer of
Third Eyesight. “For branding, a certain consistency is critical and
this can be done by having retail control.”
is a challenging market because of the iPhone’s premium pricing. It now
has less than 2 percent of an Indian market in which four-fifths of
phones cost less than $150. The iPhone maker had sought permission to
become the first company allowed to import and sell cheaper refurbished
phones into the country, but was said to have been rejected.
Apple’s sales there jumped 56 percent in the March quarter, indicating
that demand for the brand is growing. Cook called out the country’s
“incredibly exciting” prospects during his last earnings conference and
said his company will devote more energy to that market. Apple’s stores
have always played a key-role in attempts a convey a unique image and
feel for its products.
“It gives Apple more branding and
positioning strength. Having a direct presence will help it gain more
mindshare,” said Vishal Tripathi, an analyst at research firm Gartner.
“It can help create a well-fashioned brand in the Indian market.”
(Published in Bloomberg)