Just last week, I linked to an Economic Times report that claimed that the Indian Government was planning to relax Foreign Direct Investment (FDI) rules relating to compulsory local outsourcing. In case of Apple, the rules meant that they’d have to source at least 30% of the raw material from India for their products if they planned to invest in opening Apple Stores in the country.
Today, the Indian Government has issued a press release announcing FDI reforms across fifteen sectors, including some big changes related to Single Brand Retail Trading (SBRT) and E-commerce companies.
The relaxed norms contain the following two notable points:
Presently, the FDI policy considers the date of receipt of the FDI for sourcing 30% of the value of goods. With the changes announced today, the period starting from the date of opening of the first store will instead be considered.
Secondly, and more importantly, the govt. has also considered making special exceptions. Section 8 (i) of the press note states that:
Further, it is seen that in certain high technology segments, it is not possible for retail entity to comply with the sourcing norms. To provide opportunity to such single brand entities, it has been decided that in case of ‘state-of-art’ and ‘cutting- edge technology’ sourcing norms can be relaxed subject to Government approval.
This means that for some companies (Hint: Apple), it is now possible to get an approval from the govt. without the fulfilling the sourcing requirement. Seeing company-operated Apple Stores in India doesn’t seem like a distant dream any more.