Apple And IKEA Will Soon Open Stores In India
Inroads have been made as far as getting clearance for setting up of Apple Stores in India. The Government today announced sweeping reforms in the rules on foreign direct investment.
India will be introducing a three-year relaxation on local sourcing norms. Apple is expected to benefit from it and would further be eligible for an extension up to five years, if able to prove that their products are “state of the art:
A Panel from Apple comprising of experts from the department of industrial policy and promotion (DIPP) and information technology had recommended a waiver from the 30% sourcing norms on the grounds that Apple’s products were “cutting-edge”, hence making it eligible for doing away with the domestic procurement rule.
Apple’s plan to open stores in the country suffered a setback as the Foreign Investment Promotion Board (FIPB), which comes under the finance ministry, cautioned a panel’s decision to relax the mandatory local sourcing norm, for the company to sell its products through the single- brand window.
Though the government has allowed 100% FDI in the segment but companies are required to have permission for overseas holding exceeds 49%. However, last month the Commerce & Industry Minister Nirmala Sitharaman raised hopes of a review saying her ministry will discuss the issue with the finance ministry.
The Times of India confirmed that the concern over the finance ministry’s proposal has been flagged at the highest level and there has been a suggestion that the issue should be discussed at the level of officers.
Apple, on the other hand, confirmed that it won’t set up company owned stores in India if the government doesn’t exempt it from sourcing materials locally
Reports in the media suggest Apple has no immediate plans to manufacture devices or buy spares from vendors in the country. During his recent visit to the country, Apple CEO Cook said, “that opening its own stores in India is a key element of the vision for what he sees as one of the most important markets for the iPhone maker in terms of setting benchmarks for sales and service.”
Another big name to benefit from FDI is the furniture giant IKEA
In new FDI policy, India has allowed 100% foreign direct investment(FDI) in civil aviation sector with lower entry level barriers for airlines that want to fly international routes. Also, companies can own up to 74% in ‘brownfield’ pharmaceuticals projects without prior government approval. India already allows 100% ownership of greenfield pharma businesses.