India loosens 30 percent sourcing requirement on sale goods, paving the way for Apple Stores

The India government has loosened up — but not eliminated — a 30 percent rule that was putting a damper on Apple's plans to open up retails stores in the country.

On Monday, the India government has modified its taxation and sourcing laws that allow "single-brand retailers" that are foreign owned to temporarily meet a 30 percent sourcing requirement by buying goods made in India and selling them in other countries. The waiver is for five years, at which point, the company would be required to source 30 percent of its goods sold in retail stores from within the country.

Apple has been seeking a rule change for over a year, as it has expanded its operations and assemblies in India.

Opinion in the country about the changes vary, according to the New York Times. Business advocates call it "dramatic relief" for international corporations, with concern from India trading groups that multinationals will squeeze out local businesses unfairly.

Manufacturing the iPhone SE and possibly other devices in the future with expansion in India goes some way towards fulfilling a number of conditions imposed on Apple as a condition of doing business, along with providing tax breaks.

Assembly of the iPhone SE at the Karnataka Wistron facility began in mid-May 2017. Officials in the Indian government hope the price for the iPhone SE will be cut in time by as much as $100 compared to the current local price, though Apple is likely to try and avoid too much of a reduction in order to preserve its margins.

The first iPhone SE models built in India by Wistron went on sale in various cities around India in June 2016. The devices are marked "Designed by Apple in California, Assembled in India."

As far as sales channels are concerned, Apple is considering flagship stores in New Delhi, Bangalore, and Mumbai — all three locations where most of India consumers wealth is centered. This is in addition to the Apple Authorized Reseller expansion that Apple was said to be examining in March.

In response to a question at the most recent Apple earnings conference call, Apple CEO Tim Cook said that there was "great momentum" in India, but Apple was still "gaining understanding" of the market.

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11 Comments

wood1208 2935 comments · 10 Years

About 6 years ago

Hope, cheap Chinese phones don't flood the Indian market.

ksec 1502 comments · 18 Years

wood1208 said:

Hope, cheap Chinese phones don't flood the Indian market.

They already did.

I have very little trust and faith in the Indian government. What they want is 5 years from now Apple will have some of its manufacturing ecosystem in India.

But simply looking at how they deal with all these request, and how little understanding they have, and how unwillingly admit what problem and wrongs they have as a country. I can only see Apple bringing in the lowest, poorest, simplest form of manufacturing to India.

Then in five years time they will ask the stupid question why iPhone XV still isn't manufactured in India and be very unhappy with it.

gmgravytrain 884 comments · 8 Years

wood1208 said:

Hope, cheap Chinese phones don't flood the Indian market.

Are you kidding? iPhones have about 2% market share in India to Android's 98% market share. Apple is just wasting time and effort in India. It's like trying to sell ice to Eskimos. Those consumers have no interest in buying iPhones. The Indian government only wants Apple to employ Indian citizens so they can buy better Android smartphones. I'm not sure why Apple has any interest in India except for possibly goodwill purposes. Don't most Indians put all their money into buying gold jewelry? If so, it would seem to make sense to keep hoarding gold than buying iPhones. A least gold appreciates in value. Any Apple store in India would likely be the only empty Apple store on the planet. I know India does have their own domestic-made smartphones but I'm sure Chinese smartphones will quickly sell if the prices are low enough.

sree 153 comments · 8 Years

ksec said:

wood1208 said:

Hope, cheap Chinese phones don't flood the Indian market.

They already did.

I have very little trust and faith in the Indian government. What they want is 5 years from now Apple will have some of its manufacturing ecosystem in India.

But simply looking at how they deal with all these request, and how little understanding they have, and how unwillingly admit what problem and wrongs they have as a country. I can only see Apple bringing in the lowest, poorest, simplest form of manufacturing to India.

Then in five years time they will ask the stupid question why iPhone XV still isn't manufactured in India and be very unhappy with it.

Some unnecessarily strong words about the world's third largest economy.

What the government did was not for Apple. It was a policy change that also ended up helping Apple. There was no indication it was motivated by Apple's request in any way. The policy shows an understanding of the troubles a multinational might face in the initial years, and so that part of it has been eased by allowing an offset mechanism. The policy as such still stays.

You might not like it, but the fact remains that the indian economy has been one of the strongest performing economies in the world since the late 90s, and even as economies around the world were crashing in 2008, there was minimal impact on it. Sure, china might have done a lot more in a much shorter time, but being second to china is nothing to be ashamed about. (I am not even getting into the fundamental weaknesses in the china story).

Apple not having a proper presence in the second largest smartphone market in the world (US is third) is just silly, and it is more apple's loss than india's.