Apple’s Advantage from India’s Local Sourcing Norms for Single Brand Retail

Following bitter trade relations between the United States and China, Apple had to lose its iPhone market there in China. Next, Apple shifted its strategy to India, where the company is planning to open its retail outlet. Now with eased out local sourcing norms for single-brand retail, Apple will benefit a lot.

Even as global Foreign Direct Investment (FDI) flows have slowed, India is performing better with 6% growth over the previous year, said Nirmala Sitharaman, finance minister of India while announcing union budget 2019.

But what advantage does Apple have from this news? Well, India is planning to ease local sourcing norms in single-brand retail. And Apple is going to advantage more than other foreign brands like OnePlus and Oppo wishing to unveil their retail stores in India.

Budget 2019: Apple Can Now Set up Retail Outlets Easily in India

Notably, “Global FDI flows slid by 13% in 2018 to $1.3 trillion from $1.5 trillion, as per the world investment report… India’s inflows remained strong at $64.37 billion marking a 6% growth over the previous year, Sitharaman notes.

She further says, “I propose to further consolidate the gains in order to make India a more attractive FDI destination.”

She added that “Local sourcing norms will be eased for FDI in the single brand retail sector.”

Apple has been struggling for long to gain a foothold in the Indian market. This decision is welcome by industry experts as this would help Apple to set up its outlets in India.

Speaking exclusively to Economic Times, Rushabh Doshi, research manager at Singapore-based research firm Canalys, said, “Apple should be celebrating this. If anything, this makes it easier for them to ramp up their timelines for an India store.”

Doshi also added, “An Apple store in time for the launch of the next iPhone will create a positive hype and will boost overall sales further.”

Another research analyst Prabhu Ram, head of intelligence group at Cybermedia Research, said, “The relaxation of mandatory 30% local sourcing norm will spur the growth of the Indian economy, and will potentially help in attracting large players in the single-brand retail sector, including the likes of Apple.”

Apple’s manufacturing partners Foxconn and Wistron have already set up their units in Bangalore and Chennai.

Earlier, Apple CEO Tim Cook noted, “Manufacturing iPhones in India will allow the company to sidestep 20% tariffs on imported phones, making its devices more competitive”.

Cook believes that “India is a very important market in the long term. It’s a challenging market in the short term, but we’re learning a lot. We plan on going in there with sort of all of our might.”

Do you think Indians would buy low-priced iPhones in the future?