Despite the fact that the Central Government has relaxed the ‘Sourcing Norm’ for single brand retail to allure more foreign investors, Apple is keeping very steady on the proceedings. Company stated that it is not in a hurry to launch its retail store in India unless it gets the clear picture of sourcing norm.
As per the recent amendment by the government in FDI norm, foreign single-brand retailers can comply with the controversial 30 per cent local sourcing requirements over the first five years of operations, and not from the first year itself, as was originally proposed in the policy. However, it further stated that these rules will not apply for the first three years of operations to foreign companies that sold products with 'cutting-edge' and 'state-of-the-art' technology.
According to a source close to the story, last month, when these amendments were rolled out, the market sentiments were really high and experts felt that it is a profitable deal for Apple. But on the contrary, Apple was not so convinced with these amendments.
There is a certain opaqueness regarding the rules. In addition, the company does not want to commit to complying with local sourcing requirements. It can only start manufacturing in or begin sourcing from India once it attains a certain scale of business which is difficult to estimate right now, source further added.
Apple wants the government to clearly define what it means by 'cutting-edge' and 'state-of-the-art' technology. One arm of the government, the Department of Industrial Policy & Promotion (DIPP), had earlier said that Apple met the criteria and should not be subject to local sourcing norms. But the Foreign Investment Promotion Board had refused to grant any exemption as it felt DIPP had not properly defined 'cutting-edge' and 'state-of-theart' technology.