India’s government has reversed its decision last month not to ease local sourcing rules for Apple and has granted the iPhone maker a three-year waiver on the requirement, which clears the way for it to open single-brand stores in the country.
The new sourcing rule can be extended by an additional five years if a company can prove its products are “state of the art”, the Economic Times said. But the government hasn’t made a decision if Apple means that criteria.
In late May India’s government, days after Apple CEO Tim Cook visited the country, told the iPhone maker that it would have to meet its 30 per cent domestic sourcing rule (for components in a device) for it to operate Apple Stores in India.
Apple currently has no branded retail stores in India and sells its devices through third-party resellers but plans to open at least three Apple Stores in the country by the end of next year. It has been lobbying the government to ease its domestic sourcing requirement if it receives approval to open Apple Stores.
The reversal is part a major reforms package of the country’s foreign direct investment policies announced by the head of the country’s central bank. The announcement comes just days after central bank governor Raghuram Rajan, who was popular with foreign investors, announced he would not be available for reappointment when his term expires in September, the Times reported.
The decision comes at a time when iPhone sales are slowing and Apple has faced a number of legal and regulatory obstacles in India and China. In early May Indian authorities rejected Apple’s request to sell used iPhones.
India, the third largest smartphone market in the world, is now a vital market for Apple, which last quarter posted its first ever drop in iPhone sales since the device was launched in 2007. India was the one bright spot in its otherwise poor results in fiscal Q2, with local iPhone sales up 56 per cent in the quarter.