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Govt panel recommends relaxing local sourcing norms for Apple

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A government panel has recommended relaxing mandatory local sourcing regulations for Apple, a decision that could help Apple to setup single-brand retail stores in India, reports Business Standard. Apple has reportedly given a detailed presentation to a committee headed by Department of Industrial Policy and Promotion (DIPP) secretary Ramesh Abhishek, regarding its products and other technology.

The DIPP is expected to send the proposal for final approval to the Finance Ministry. In January, Apple had applied to the DIPP, seeking permission to open single brand retail stores and an e-commerce business in the country. It had also asked the DIPP to relax local sourcing regulations at that time. However, In October 2015, Apple had reportedly signed a deal with Croma (Infiniti Retail) to set up its first retail ‘Apple Store’ in Mumbai and Bangalore.

FDI Norms: In November last year, the ministry of commerce had opened up foreign direct investment (FDI) in 15 sectors, which includes broadcasting sector, single brand retail, banking in the private sector. Additionally, a foreign brand looking to open single brand retail stores in India must source at least 70% of its products in house, and 30% from Indian manufacturers. However, in case of ‘state-of-art’ and ‘cutting edge technology’ sourcing norms can be relaxed subject to Government approval.

The government also decided that an entity, which has been granted permission to undertake single brand retail, would be permitted to undertake ecommerce activities as well.

LeEco seeks FIPB approval: This month, Chinese smartphone maker LeEco that recently launched its devices in India has filed an application with the Foreign Investment Promotion Board (FIPB), seeking approval for opening single brand retail shops and an e-commerce portal in India. Additionally, the smartphone maker has also sought relaxation from the 30% domestic sourcing rule.

Xiaomi seeks DIPP approval: In April, Xiaomi also sent an application to the Department of Industrial Policy and Promotion (DIPP) for opening single brand retail stores in India; it had also asked for exemption from the 30% domestic sourcing rule. In March 2015, Xiaomi had launched its online store in India

iPhone Sales: iPhone’s global sales had slowed down; it sold 51.2 million iPhones this quarter (Q2FY16), down from 61.2 million iPhones in the same quarter last year. However, even with a hefty price tag of Rs 60,000 for iPhone 6s during its launch in India, iPhone sales in India were up 56% this quarter. But note that Apple reportedly holds only a 2% volume share of smartphones in India as of February.

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