Apple Sees Potential for Indian Retail Stores; Does India?
Following recent news regarding the launch of Apple Inc.’s (NASDAQ:AAPL) first South American store in Rio, Brazil, it seems Apple has been more aggressively pursuing retail opportunities on another continent as well. The tech giant asked that the government in India relax its laws regarding a local sourcing policy, which currently prohibits the company from setting up shop in the country, Business Standard reports.
Currently, India’s foreign direct investment (FDI) policy requires that for proposals involving foreign equity in excess of 51 percent, the company must source 30 percent of its contents from India’s micro and mid-size enterprises. But Apple is unable to meet India’s 30 percent sourcing clause since it uses very little hardware for its products, it argues.
The company met with officials at India’s Department of Industrial Policy and Promotion recently, which is an agency that governs the country’s FDI policy. The tech giant has asked for the department to make an exception for Apple, allowing the company to open branded retail stores of its own.
Apple has been interested in India for years now, and has been eyeing the country since 2006, hoping to set up branded retail stores there. Apple has been trying to devise a way to get around the country’s strict FDI laws. The Department of Industrial Policy and Promotion is currently evaluating methodologies it might use so that a firm, such as Apple, which is keen to invest in India but does minimal sourcing may still be able to do so.
“[Apple] have clearly told us that they cannot adhere to the sourcing norms as they hardly use any hardware for their products. We have also told them that while the government is keen on investments, it cannot make exceptions. However, we can analyze a company’s needs on a case by case basis,” a senior DIPP official told Business Standard.
He added that Apple is very “keen to invest in India, buoyed by the demand for its products, which is rising every year.” The company’s hopes were reignited when India allowed 100 percent FDI in single-brand retail, a switch which happened as of 2012.
As a result of the current Apple Reseller store model in India, Apple’s market share remains at a lowly two to three percent.