Apple, IKEA gain after local-sourcing norms eased for single-brand retail

The government’s decision on Wednesday to ease local-sourcing norms for single-brand retail is likely benefit players such as IKEA, Uniqlo and H&M, said sector experts and companies. 

Apple, which has not been able to open fully-owned stores because of the 30 per cent sourcing norms, was not available for comment. Analysts said the Cupertino-based company may now launch its e-store in the country. 

According to the Cabinet decision taken on Wednesday, all procurement in India — for domestic or export markets — will be accepted as local sourcing. Also, single-brand retailers will be allowed to start online store even before they set up brick-and-mortar outlets. They will, however, have to establish an offline presence within two years of launching e-stores.

A retail industry source said this would clearly benefit players such as Apple that are struggling to launch physical stores. They have been depending on franchisees as local-souring norms did not suit them. 

Harsha Razdan, partner, consumer markets, KPMG India, said, “Allowing single-brand retailers to start online stores, while meeting local-sourcing norms, aligns well with the Digital India initiative, giving them time to build their brick-and-mortar presence.”

Shobhit Agarwal, managing director and chief executive officer, Anarock Capital, said, “Foreign retail giants such as Apple will now find the Indian market more lucrative to invest. Besides Apple, other foreign brands, who have been in the wait-and-watch mode so far, will make their foray into India and partake of the consumption story here.”

According to retailers which already operate in the country, the new norms will help in ease of doing business, something they have been demanding for a while. 

Janne Einola, country manager of fashion retailer H&M, said, “We have been sourcing from India for the past 30 years for our international markets. It is great to see global sourcing is now part of the 30 per cent local sourcing norms. We see this supporting ease of doing business in India and driving in larger investments.”

In a statement, furniture retailer IKEA India said, “The government’s effort to enhance ease of doing business for single-brand retailers is encouraging. IKEA has been sourcing from India for more than 30 years. We are committed to increase local sourcing from the country.”