Smartphone giant Apple and Chinese handset vendor LeEco are pushing the Indian government to relax its domestic sourcing requirement if they receive approval to open single-brand retail stores.
Apple recently put its case to the Department of Industrial Policy and Promotion on why its products should be exempted from local sourcing rules, while LeEco requested the same. Both firms argued that their products are ‘state-of-the-art’ and ‘cutting edge’ and should be spared from the content requirement.
The country’s local sourcing law requires foreign firms with single-brand outlets to source 30 per cent of the sales value of the components from India within five years of starting operations, the Economic Times said. But foreign direct investment regulations allow the government to relax the rules for firms “undertaking single-brand retailing of products having state-of-the-art and cutting-edge technology and where local sourcing is not possible”.
LeEco, one of the largest online streaming firms in China, applied with the Foreign Investment Promotion Board to open single-brand stores in the country to sell its products both through retail outlets and online. Apple applied for the same in January.
Sources say the government is considering relaxing the local content rule as part of its effort to make the country more business friendly to foreign investors and a decision is expected soon.
Apple currently has no branded retail stores in India and sells its devices through third-party resellers.
Chinese smartphone maker Xiaomi also has applied to open its own stores in the country.
India has grabbed the attention of global smartphone vendors as it is the third largest smartphone market in the world, after China and the US, and is forecast to overtake the US next year, according to Strategy Analytics.
Previously known as Letv, the Chinese vendor in January adopted the LeEco brand, as it looks to move into India with two devices it describes as “flagship smartphones”. In addition to smartphones, it aims to sell TVs, VR headsets and Bluetooth devices in India.
It recently announced a content partnership with ErosNow, which is described as “one of India’s leading on-demand Bollywood entertainment networks”. The vendor also has opened more than 500 service centres in India to provide after-sales support, offering full-time customer service in a number of local languages.