India has liberalised its foreign direct investment rules, in a boost to single-brand retailers such as Apple. The tech giant has lobbied the Indian Government to relax its rules for years, which has prevented the company from opening online stores without first establishing a bricks-and-mortar retail presence. The rules also stipulated that companies must source 30 percent of their production locally.
Now, thanks to reforms announced on August 28, India’s sourcing laws will change so that products manufactured in accordance with the 30 percent sourcing rule can now be sold in other markets, not just in India. In addition, single-brand retail companies will be able to set up online stores before they open retail outlets.
Although smartphone sales are currently in decline around the world, India’s smartphone market remains highly attractive – it is the world’s fastest growing, and also its second largest
To boost sales, several iPhone models have been assembled locally. This allows the company to enjoy some of the tax benefits Narendra Modi’s government have provided as part of its Make in India initiative. However, because retail stores have not been set up in India, Apple has sold its products in the country through third-party offline retailers and e-commerce sites like Amazon. These companies have tended to offer heavy discounts on the iPhone and MacBook Air products. Although this has boosted sales, Apple executives have voiced their dissatisfaction with this arrangement on the grounds that it dilutes the brand’s image.
Apple is now poised to launch online sales of its devices in India within the coming months. It is also hopeful to set up its first retail store, although this is likely to happen further down the line. “It will take us some time to get our plans underway and we’ll have more to announce at a future date,” a spokesperson said.
Although smartphone sales are currently in decline around the world, India’s smartphone market remains highly attractive – it is the world’s fastest growing, and also its second largest. For Apple, these new reforms will make doing business in India easier and more lucrative than ever, helping it to catch up with Chinese smartphone manufacturers, such as Xiaomi, which have benefitted from aggressive uncontested marketing in India.