Commerce ministry bats for local sourcing waiver for Apple

Nirmala Sitharaman says not in favour of refurbished phones being sold in India

Days after the Finance Ministry rejected the proposal to waive off mandatory local sourcing to set up single-brand stores in India for Apple Inc, the Commerce Ministry on Monday said it will again push the case of the iPhone-maker.

However, Commerce Minister Nirmala Sitharaman said, she was not in favour of Apple’s another proposal to import refurbished phones and sell in India. “We are not in favour of any company selling used phones, however certified they may be,” she said.

While Foreign Investment Promotion Board (FIPB), under the Finance Ministry, recently allowed Apple to set up retail stores in India, the US-based company’s request to waive off the mandatory local sourcing of at least 30 per cent material was rejected.

According to DIPP norms, 100 per cent foreign direct investment (FDI) is allowed in single-brand retail as long as the retailer sources goods worth 30 per cent of the total value locally. This rule can, however, be relaxed for companies which bring “cutting edge” technology to India, subject to government approval. A panel, comprising the DIPP secretary, a member of the NITI Aayog and representatives from the Department of Electronics and Information Technology, can give exemptions on a case-to-case basis. This panel had last month exempted Apple from the sourcing norms.

However, the FIPB, led by Economic Affairs Secretary Shaktikanta Das, suggested that proper guidelines be laid down by DIPP to define what comprises “cutting edge” technology, remaining unconvinced of Apple’s plea.

Apple had earlier stated its difficulty in meeting the norms, since it does not have any manufacturing unit in India. The issue will be closely watched by the Chinese phone-makers, eager to expand in India. Earlier this month, Apple CEO Tim Cook visited India and met Prime Minister Narendra Modi to discuss the company’s India plans. Apple currently sells its products in India through arrangements with other retailer.

‘Tax holiday for start-ups'

The Finance Ministry should consider raising tax holiday for start-ups to 7 years from the current three years, Sitharaman said. “We shall pursue it and there shall now be lots more interactions with them,” she told reporters while briefing them on the initiatives taken by her ministry during the last two years. For 2016-17, the allocation of Rs 1,100 crore has already been made and 35 new incubators have been established, she said.

‘FDI equity flow up 53 per cent’

On FDI, she said that between June 2014 and January 2016, FDI equity flow recorded a growth of 53 per cent to $60.04 billion, from $39.19 billion during the preceding 20 months. FDI inflows in the country increased to the highest-ever figure of $51 billion in 2015-16, she added. Further, talking about the ‘Twitter sewa’ launched by her ministry, she said stakeholders are using this facility and their queries have been resolved on time.

Within one month, 98 per cent cases have been responded to, the minister said, adding that out of 750 queries raised, 735 have been cleared.

‘EU wants misunderstandings out before resuming FTA talks’

The European Union wants to sort out some ‘misunderstandings’ before resuming the talks on the long-stalled proposed Free Trade Agreement with India, Sitharaman said.

She also said that the two sides are yet to finalise the dates to resume the negotiations. “EU Trade Commissioner Cecilia Malmstrom has written to me and that there are no pre-conditions and that EU would want to have some of the misunderstandings sorted out much before the talks can resume,” Sitharaman said. The minister said one has to be mindful of the fact that EU is going through a time when they are waiting for the outcome of Brexit.

On other FTAs, Sitharaman said a framework is being drafted for the proposed India-Iran preferential trade agreement. She said India is moving forward on other free trade pacts including the Regional Comprehensive Economic Partnership (RCEP), Australia, Israel and Gulf Cooperation Council (GCC). A joint study group has been set up for the India and Eurasian Customs Union — Russia, Belarus and Kazakhstan — pact and the first draft report is ready. With the South American country Peru also, a joint study group has been established to explore the possibility of entering into an FTA, she added.