Apple, four others apply for easier domestic sourcing regime

| Updated on: Jan 17, 2018

BL09_IT_SITHA

Apple India and four others have applied for relaxation in local sourcing norms to set up single brand retail stores in India under the new foreign direct investment (FDI) rules notified by the government in June.

The other companies that have submitted their requests for the three-year exemption from local sourcing include Acer, Le Ecosystem Technology, Lenovo (India) and OPPO Mobiles, Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Lok Sabha on Monday.

“No decision has been taken by the government,” Sitharaman said.

As per the existing FDI rules, for foreign investment in the single-brand retail segment beyond 51 per cent, sourcing of 30 per cent of the value of inputs purchased will have to be done from India. Companies with ‘cutting-edge technology’, however, are given relaxation in the local sourcing norms, but these flexibilities have been tightened. Under the new rules, there is a three-years cap on exemption from sourcing norms for companies qualifying as `cutting-edge’ (earlier there was no cap) after which such companies will have a five-year relaxed sourcing regime.

An expert panel under the Department of Industrial Policy & Promotion (DIPP) had approved Apple’s application for being recognised as a company with `cutting-edge’ technology before the new rules were notified, but the Finance Ministry had rejected the decision. The panel will now have no role to play under the new rules.

Single brand retailing

The Minister, in her reply to Lok Sabha, said the proposals undertaking single brand retail trading including those involving issues relating to relaxation of sourcing conditions on account of ‘state of the art’ and ‘cutting edge technology’ are examined by the ministries/departments concerned.

After that, the government considers these proposals taking into consideration views and comments of such departments, she added.

Sitharaman pointed out that since June 2014, the government has approved 20 proposals for foreign investment in the single brand retail trading. These include Adidas India, Tommy Hilfiger, Nike India and Montblanc Services.

Published on August 08, 2016
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