Photographer: David Paul Morris/Bloomberg

India Clears Path for Apple to Open First Retail Store

Updated on
  • Tweaks to sourcing rules to benefit Apple: people familiar
  • Apple looking to tap world’s fastest-growing smartphone market

Prime Minister Narendra Modi is clearing the way for Apple Inc. to open its first retail store in India after repeated delays, according to people familiar with the matter.

Modi’s cabinet on Wednesday approved a three-year exemption on local-sourcing requirements for foreign single-brand retail companies with “cutting-edge technology," according to the people, who asked not to be identified due to rules for speaking with the media. At the same time, the government will make it easier for companies like Apple to meet that criteria, the people said.

The moves represent the latest shift for Modi’s government, which has sent conflicting signals in recent months over Apple’s bid to set up shop in India. Apple Chief Executive Officer Tim Cook visited India for the first time in May as he seeks to tap the world’s fastest-growing smartphone market to counter slowing sales growth elsewhere.

India last year said it would exempt companies with “state-of-the-art technology" from a requirement to source 30 percent of components locally. In June, the commerce ministry sought to limit that exemption to three years, on top of the five years that all single-brand companies get to comply with local sourcing rules. The finance ministry also questioned the definition of “cutting-edge technology," complicating Apple’s plans.

Modi’s push to clarify those procedures will pave the way for Apple to open a retail store, according to the people. The new rules may also impact China’s Xiaomi Corp. and Leshi Internet Information & Technology Corp., which have also asked for exemptions.

Representatives from Apple and Leshi Internet didn’t immediately respond to e-mails seeking comment. Xiaomi declined to comment. Industry secretary Ramesh Abhishek didn’t respond to two calls on his mobile phone.

Apple’s market share in India is much less than Samsung Electronics Co. and Micromax Informatics Ltd., which offer cheaper phones to price-conscious Indians. While Apple currently sells its iPhones and iPads through franchisees as well as the retail units of India’s biggest conglomerates Tata Group and Reliance Industries Ltd, it wants its own stores to further boost sales.