Apple's India pie needs local flavour

Tech giant allowed to set up fully owned shops, with 30% local sourcing like everyone else

Close on the heels Apple Inc Chief Executive Officer Tim Cook’s visit, the tech giant has got the green light to set up retail stores, but will have to source 30 per cent material locally, like everyone else.

The Foreign Investment and Promotion Board (FIPB) gave permission to Apple’s proposal to open wholly-owned stores in India, multiple government sources confirmed to Business Standard.

APPLE CUTTING EDGE

• 100 % foreign direct investment has been allowed for single brand retailing, according to norms of the DIPP
• 30% of the value of goods purchased has to be sourced locally
• This rule has, however, been relaxed for companies which bring “cutting edge” and “state-of-the-art technology” to India
• A panel comprising the DIPP secretary, a member of the NITI Aayog and representatives of the line ministry has been constituted to give exemptions

“The relaxation of 30 per cent (local sourcing) cannot be given. We have cleared it as a single-brand retail proposal, without any relaxation to sourcing norms,” said a senior officer.

According to norms of the Department of Industrial Policy and Promotion (DIPP), 100 per cent foreign direct investment has been allowed for single-brand retail. But manufacturers have to source at least 30 per cent of the goods’ value locally.

This rule has, however, been relaxed for “cutting edge” and “state-of-the-art technology” companies, subject to government approval.

A panel, comprising the DIPP secretary, a member of the NITI Aayog and representatives of the line ministry, can give exemptions on a case-to-case basis. This panel had last month given its nod to the iPhone maker exempting it from the sourcing norms.

Currently, any such application goes to the FIPB, which is led by Economic Affairs Secretary Shaktikanta Das.

Sources said FIPB has kept the sourcing rider intact for Apple’s case. “The official communication on the matter will be out in a couple of days,” said a second official.

Sources said the FIPB has also asked the DIPP to define “state-of-the-art” and “cutting-edge technology”.

Single-brand retail proposals like that of Apple are a little different from the ones taken up by the FIPB in its usual meetings. It met on Friday, but Apple was not on the agenda. “Single-brand retail proposals are examined by the DIPP; then, sent to Department of Economic Affairs, where it is examined by the FIPB desk. Then these are sent to the DEA secretary and then the finance minister,” explained the official quoted above.