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The
new rules exempt foreign retailers for three years from a
requirement to source 30 percent of the goods sold in
company-owned stores locally.
That would allow Apple, which currently sells its iPhones, iMacs
and iPads through resellers, to set up its own shops in India,
ending months of uncertainty for the California-based company
that had first applied for store licenses in January.
India is the world's fastest growing large smartphone market
with sales expected to rise over 25 percent this year.
For Apple, which has less than a two percent share in the
smartphone market in the country, gaining a bigger footprint in
India is crucial at a time when growth in China and the U.S. has
stalled.
The announcement was part of a sweeping reform of rules on
foreign direct investment, which also opened up the defense and
civil aviation sectors to full foreign ownership.
The retail rule changes are also likely to help Swedish
furniture-retailer IKEA [IKEA.UL], which is setting up stores in
Hyderabad and Mumbai, to expand operations.
Apple had sought to get around the sourcing rules by citing a
clause that exempted retailers of "cutting edge" technology from
the requirements, however sources had told Reuters that some
government officials had quibbled over whether Apple products
met that criteria.
The new directive paves the way for Apple to resubmit its
application and rapidly start retail stores in India. It can
also seek an additional exemption for five years if it convinces
the government its products meet the "cutting edge" criteria.
Analysts said opening the door for Apple retail could also lead
to Apple looking favorably on India as a manufacturing
destination.
"The government hopes that if they can show them that is the
market where consumers are Apple will be more willing to start
manufacturing operations here," said Neil Shah, an analyst at
Counterpoint Research.
India has been lobbying Apple and its partner Foxconn to begin
manufacturing in the country as part of Prime Minister Narendra
Modi's agenda to bring in foreign manufacturers to India to
create millions of jobs.
The announcement comes a month after Apple boss Tim Cook met
Modi to discuss Apple's plans for retail and manufacturing in
India as part of his first-ever trip to the country.
(Reporting by Himank Sharma, additional reporting by Manoj Kumar
and Rajesh Kumar Singh; Editing by Euan Rocha)
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