iPhone may have to cut edge in India

Tim Cook will need to convince Prime Minister Narendra Modi that the iPhone is cutting edge if the Apple chief executive is to gain easier access to what will be the world's second-largest smartphone market.

The government on Tuesday said it would relax rules for firms as long as they can prove their tech is so "state of the art" that it's impossible for them to comply with norms requiring 30 per cent of products be sourced locally. The move paves the way for Apple to open its own stores in India, where it depends on resellers to sell its China-made devices.

Higher sales in India will help Apple maintain growth amid China's slowdown, while Modi stands to gain access to top technology that could eventually boost local manufacturing and create jobs.

Apple currently has a two per cent of the market in India, according to International Data Corp, partly because it doesn't wrap its devices into discounted deals but also because consumers are denied the Apple store experience. "It's a key competitive advantage to have a store," said John Butler, senior technology analyst at Bloomberg Intelligence. "The retail store strategy is going to be a bigger part of their strategy."

Apple spokesman Alan Hely didn't respond to an e-mail seeking comment. Ramesh Natarajan, head of sales at Redington India, Apple's main distributor in India, declined to comment when asked if the revised rules will benefit Apple.