It seems Apple CEO Tim Cook's India visit didn't go in vain. Decks have cleared for the setting up of Apple stores in India with the government announcing sweeping reforms to rules on foreign direct investment.
Apple is expected to be a beneficiary of a three-year relaxation India is introducing on local sourcing norms with an extension of up to five years possible if it can be proven that products are "state of the art".
Apple's plans to open stores in the country had suffered a setback as the Foreign Investment Promotion Board (FIPB), under the finance ministry, red-flagged a panel's recommendation to relax the mandatory local sourcing norm for the Cupertino-based company to sell its products through the single-brand retail window.
The panel comprising representatives from departments of industrial policy and promotion (DIPP) and information technology had recommended a waiver from the 30% sourcing norm on the ground that Apple's products were "cutting-edge", which allows for doing away with the domestic procurement rule.
So far, the government allowed 100% FDI in the segment but companies are required to seek approval if overseas holding exceeds 49%. However, late last month, commerce & industry minister Nirmala Sitharaman had hinted at a review saying her ministry will discuss the issue with the finance ministry.
Sources had told TOI that the concern overthe finance ministry's proposal has been flagged at the highest level and there has been a suggestion that the issue should be discussed at the level of officers.
Apple, on its part, had reportedly said that it won't set up company-owned stores in India if the government doesn't exempt it from sourcing materials locally.
The reports accrued this to the fact that Apple has no immediate plans to manufacture devices in India or buy parts from vendors in the country. During his recent visit to the country, Apple CEO Cook said that opening its own stores in India is a key element of the vision for what he sees as one of the most important markets for the iPhone maker in terms of setting benchmarks for sales and service.
Other single-brand retailers like furniture giant IKEA are also expected to benefit. In other changes, India allowed 100% foreign direct investment (FDI) in civil aviation, following on from last week's launch of a new policy that lowered barriers to entry for airlines that want to fly international routes.
The government also allowed foreign companies to own up to 74% in 'brownfield' pharmaceuticals projects without prior government approval. India already allows 100% ownership of greenfield pharma businesses.@ NEW DELHI:
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