Indian government exempts Apple from 30% local-sourcing

Economic Times:

A government panel has recommended exempting Apple from mandatory local sourcing norms, a move which would pave the way for Apple to open single-brand retail stores in the country. […]

“The committee has found that the company’s products are cutting edge technology and state-of-the-art. It has recommended to exempt them from the local sourcing norms,” sources said. […]

Apple has no wholly-owned store in India and sells its products through distributors such as Redington and Ingram Micro.

It’s past 1 am here in New Delhi, India as I type this; I was just about to go to bed. The importance of this news for Apple and (more so?) for Indian Apple customers can’t be overstated. I had to write about it.

Indian laws require a company to source 30% of its parts/raw materials locally. This helps safeguard interests of the country’s vendors. Since Apple manufactures only in China, they import their products into India and has heavy import-taxes levied against them. That’s the reason why, last year, the iPhones 6S commanded the highest price in India when compared worldwide. (Props to you if you can spot the irony.)

Be it money or influence or ‘that the company’s products are cutting edge technology and state-of-the-art’, there’s no denying that the Indian government is pulling a sort of one-off (in this category) for Apple.

Anecdotally, and through off-handed articles there’s a lot of demand for iPhones in India — despite the hiked prices. Few weeks ago, a report surfaced that leaders of India’s Android brands were appalled at Apple’s plan to sell used iPhones in India out of fear of losing sales to Apple.

Additionally, India doesn’t have a proper iBooks Store or support for Apple Maps. I’m sure an ease in distribution, reduced iPhone prices, an actual Apple Store, higher iPhone sales (and so the snowball goes…) should help on those fronts too.

Tim Cook said on the quarterly earnings call:

[…] in India our iPhone sales were up 56% from a year ago.

[…] I sort of view India is where China was maybe 7-10 years ago, from that point of view. And I think there’s a really great opportunity there.

The wheels are in motion.

Further read: With China weakening, Apple turns to India — Reuters

In Uncategorized by Mayur Dhaka