New FDI norms: Apple eligible for 8-year sourcing waiver

Apple's application to set up fully-owned retail stores in India came with the condition of mandatory 30% sourcing from India

American tech major Apple Inc could be eligible for an eight-year waiver for local sourcing, going by the latest FDI guidelines issued by the Union government on Monday. This comes exactly a month after Apple CEO Tim Cook met Prime Minister Narendra Modi in New Delhi during his Bollywood-to-IPL trip to India.  

“It has now been decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking single brand retail trading of products having ‘state-of-art’ and ‘cutting edge’ technology,” a press statement issued by the Centre said.

Apple’s proposed retail venture has been in the news because of sourcing riders. Its application to set up fully-owned retail stores in India came with the condition of mandatory 30% sourcing from India. Apple made it clear that it was not possible for the company to source from India and therefore it would not set up fully-owned units. Thereafter, government ministries including commerce and industry as well as finance have been engaged in formulating revised sourcing rules for cutting-edge tech companies. However, nobody has come out with a definition of cutting-edge yet.    

 

Also, India had rejected Apple’s proposal to import and sell refurbished products here.

Modi and Cook had discussed Apple’s plans for India, including the possibility of manufacturing and retailing here, in an hour-long meeting last month. Without committing on manufacturing, Cook had said in interviews: “We are here for a thousand years.” The two had met in the US also last year.

Cook had travelled from Mumbai to Hyderabad to Kanpur to New Delhi last month, meeting business heads, start-ups, politicians, film stars and sports persons. On the last day of the visit, Cook along with Apple COO Jeff Williams met the PM.

In a scenario of declining sales in markets such as the US and China, India holds immense potential for Apple. In the quarter ended March, iPhone sales fell 16% globally, while sales in India grew 56%.

The company’s largest global manufacturing partner Foxconn has already signed a joint venture with the Adani Group to manufacture in India.