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Xiaomi withdraws request for exemption to 30% local sourcing rule in India: Report

Xiaomi showroom

Update: A spokesperson from Xiaomi told MediaNama: “We have submitted our SBRT (Single Brand Retail Trading) application and currently it is under process with DIPP. We are in constant discussion with the department for small clarifications, and we have not met any major obstacles to date. We are unable to comment further on the specifics of the application as it is still being processed.”

Earlier: Chinese smartphone maker Xiaomi has withdrawn its request for exemption of the mandatory 30% local sourcing rule for opening single brand retail stores in India, reports PTI. The company had approached the Department of Industrial Policy and Promotion (DIPP) for opening single brand retail stores in India in April. However, in March 2015, Xiaomi had launched an online store in India.

MediaNama wrote to Xiaomi for a statement  yesterday, and we haven’t heard back from them.

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 e-commerce activities as well.

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Apple’s seeks approval for opening single brand stores: During his visit to India last month, Apple CEO Tim Cook had announced that Apple is planning to set up three brand retail stores in India. However, the company ran into regulatory troubles on local sourcing norms and had sought exemption of the 30% domestic sourcing rule, according to an ET report. It had  reportedly gaiven a detailed presentation to a committee headed by DIPP secretary Ramesh Abhishek, regarding its products and other technology last month.

LeEco seeks FIPB approval: In April, Chinese smartphone maker LeEco had also 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. Though no decision has been taken by DIPP, more information has been requested by the company, according to an ET reportThe Economic Times.

Past Developments

– Yesterday Xiaomi had signed a deal with Microsoft to preload Office and Skype on Xiaomi devices. It will also acquire 1500 Microsoft patents.

– In March, Xiaomi’s VoIP service Mi Voice had made an appearance in Indian handsets though it still wasn’t working at the time.

– In July, Xiaomi said that it will invest in setting up a warehouse and logistics to support operations of its online e-commerece store in India. However, it’s was not clear where the company planned to set up its warehouse.

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-In June 2015, Foxconn, a Taiwan based electronics contract manufacturing company, said that it will start making Xiaomi phones in Andhra Pradesh.

-In January 2015,  Xiaomi  held a flash sale for unboxed & refurbished RedMi 1S smartphones on e-commerce marketplace Overcart.com.

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