India throws a spanner in Apple's plans to open its retail stores

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Despite Apple CEO Tim Cook’s recent visit to India, the company continues to have trouble with its expansion plans in the country. The Indian government has said that Apple will not be allowed to open retail stores, unless it agrees to its rule of selling at least some locally-sourced products in India.

According to Indian law, all foreign single-brand retailers have to sell 30% of goods that have been sourced locally in order to open stores in India. However, the government can make some exemptions for “state-of-the-art” companies with “cutting-edge technology” that can’t be sourced locally. Initial reports had suggested that the Indian government would waive off the 30% sourcing norm for Apple under this category, but it has failed to be considered as the exception. 

“There is nothing to show that Apple’s technology is cutting edge,” a government official told Mint. “There are other companies also in the queue. It could create controversy if we waived the norms for only one without stated guidelines.”

Another source blamed the absence of adequate evidence to support the waiver. “They did ask for a waiver but didn’t provide any material on record to justify it. The decision was taken only after a thorough examination of their application,” another official stated.

Most Apple products are manufactured in China right now, and sold in India through distribution companies. To open retail stores, it will have to start assembling or producing products in India, like rivals Samsung, Xiaomi, Micromax and others.

This poses a problem for Apple, which considers India to be its next big market after slowing sales in the United States and China. While Apple’s iPhone sales in the country have risen considerably in the last year, it only has a 2% share in India’s fast-growing smartphone market. 

During Cook’s visit, the company inaugurated a technology development centre in Hyderabad and announced a forthcoming iOS app design and development accelerator in Bengaluru. 

This is the second major setback for Apple in the last one month. A few days before Cook’s visit, reports emerged about the Indian government turning down Apple’s request for selling or importing refurbished phones due to their threat as e-waste, effectively halting another attempt at increasing its share in India’s smartphone market.

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