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Apple to be exempted from local sourcing norm in India

RBR Staff Writer Published 29 April 2016

Technology giant Apple is said to gain exemption from a local sourcing condition stipulated by the Indian authorities for foreign companies to open single-brand retail stores in the country.

Apple store approval

As per the new regulations, overseas firms are required to source 30% of the raw materials locally to set up single-brand outlets in India.

The country's Department of Industrial Police Promotion (DIPP) will send a proposal emempting Apple from the sourcing norm to the finance ministry.

The move came after the company gave a detailed presentation on its products, technology, camera, and innovations, to the committee headed by DIPP, reported Economic Times.

Sources familiar with the matter were quoted by the publication as saying: "The committee has found that the company's products are cutting edge technology and state-of-the-art. It has recommended exempting them from the local sourcing norms."

The foreign direct investment (FDI) rules allow the government to relax the compulsory local sourcing rules for entities carrying out single-brand retailing of products having advanced technology and where local sourcing is not feasible.

A committee has been set up to identify products that are eligible for exemption from the compulsory local sourcing applicable for single-brand retailing.

Though the country allows 100% FDI in single-brand retailing, companies are required to get FIPB's approval if the limit crosses 49%.

Apple currently has own-branded retail stores across the world, including the US, the UK, Germany, France, China and Japan.

The US technology giant sells its products in India through exclusive reselling arrangements with chains such as Imagine and iStore, which are owned by Reliance Digital.

Taking into account its rapid growth in India, Apple has been seeking to open its own retail outlets in the country.

It is also planning to open new "store-in-store" mini-shops in outlets run by Croma, an electronics retail chain owned by Tata group, reported Livemint.com.

The Indian government is also encouraging companies such as Apple to set up manufacturing bases in the country.

Image: Apple Store in Fairview Mall, Toronto. Photo: Courtesy of Raysonho @ Open Grid Scheduler / Grid Engine/Wikipedia.