India Changes Foreign Investment Rules for the Single Brand Retail Sector giving Apple the Green Light for its First Store
In February Patently Apple posted a report titled "The Lack of Flagship Apple Stores in India is Damaging Apple's Premium Brand. Then in early May a new rumor surfaced stating that after the Indian election there could be some movement in allowing Apple to proceed with their first flagship Apple Store. President Modi went on to a big election victory which strengthened his leadership. President Trump met with President Modi at the G20 Summit in Osaka last month and the two countries were positive that their trading relations could improve in 2019.
News from The Economic Times of India today states that India plans to ease local sourcing rules in the single brand retail sector which will help Apple the most amongst other companies in setting up a retail presence in that country.
The move is aimed at attracting higher foreign investment at a time when global foreign direct investment flows have slowed while India's have been robust.
Apple's plans of building a flagship store have been hanging in the wind and local analysts are hoping that the government's latest moves will finally allow Apple to proceed. However, Apple didn't confirm the assumptions of the analysts.
Rushabh Doshi, Research Manager at Singapore-based Canalys stated for the report that "Apple should be celebrating this. If anything, this makes it easier for them to ramp up their timeline for an Apple Store in India. "
The head of intelligence group at Cybermdia Research Prabhu Ram stated for the report that "The relaxation of the 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 like of Apple."
China's smartphone maker Xiaomi stated for the report that the new rules don't apply to them as they make 99% of their handsets locally and have close to 100 retail outlets already in place. For more on this, read The Economic Times of India report.
While the speculation sounds positive, it's all conjecture at this point in time. It's unknown if the changing of this one rule resolves all of the issues between Apple and the Indian government. Apple didn't provide The Economic Times with any comment.
With that said, Apple needs to expand into India as expanding sales in China will be challenging going forward as local brands have successfully dominated the smartphone sector. With the U.S.-India trade relations beginning to thaw, India may be trying to encourage U.S. companies to expand in India to grow their ecomony. On paper, the timing finally looks right for Apple, but as always, only time will tell.
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