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The Indian Government is Giving Apple a Three Year Grace Period to Open Apple Stores

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1af 55 cover june 20, 2016

 

The Hindustan Times is reporting this morning that "Apple India finally might have the opening to spread its wings free with exclusive Apple retail outlets as the government on Monday relaxed FDI rules and eased the condition that stipulates companies to source at least 30% of their components or merchandise for being eligible to set up company-run retail stores in India.

 

The announcement is significant for customers as they will be able to now directly interact with the company and take advantage of their services directly. This means that consumers might get faster and better after sales service with their Apple products.

 

Many consumers have been facing problems in after sales service of their devices after buying them from different online portals as many Apple resellers in the country would close their doors to them. During his recent visit to the country, Apple CEO Tim Cook said that he was aware of the problem and said that the company was working towards a solution."

 

However, analysts said that Apple was aiming to do controlled marketing with the new stores according to the Hindustan Times. 'The new stores, mostly in metros, will be more about controlling end-to-end experiences for consumers which means that it will help people more from an upgrade, services point of view rather than target getting new users. Simply put, it will help in building brand loyal customers,' Tarun Pathak, ‎senior telecom analyst at Counterpoint Technology Market Research, said.

 

Bloomberg adds that "The world's second-most populous country on Monday announced the easing as part of a raft of measures intended to boost foreign direct investment and expand the leeway afforded multinational corporations. It loosened policies that require retailers to source at least 30 percent of their components locally before they can set up shop.

 

Under the new regime unveiled Monday, single-brand retailers have a three-year grace period in which they can operate stores, before they have to comply with the local sourcing requirement. Companies that can show they are selling state of the art or cutting edge technology can benefit from a relaxed local sourcing regime for "another five years."

 

Apple will now have to apply anew for permission to open its first stores in India, Commerce Minister Nirmala Sitharaman told reporters Monday.

 

"The relaxed rules give Apple a window to build up a credible brand and gives the company a chance to build up internal capability and familiarity with the supply base," said Devangshu Dutta, chief executive officer of Third Eyesight. "For branding, a certain consistency is critical and this can be done by having retail control."

 

"It gives Apple more branding and positioning strength. Having a direct presence will help it gain more mindshare," said Vishal Tripathi, an analyst at research firm Gartner. "It can help create a well-fashioned brand in the Indian market." For more, read the full Bloomberg report here.

 

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