Apple Must Sell Locally-Sourced Goods To Set Up Stores In India

New regulations for Apple to navigate past, in order to set up presence in India.

If you are in India, then your closest connection to Apple until now has been the “Authorised Reseller” and sometimes even the unauthorised resellers that you buy your iDevices from (and subsequently have to go to for after-sales support).

India does not, for now, have an authorized Apple Store like the first world countries like the U.S., the U.K. do, and most of the Europe does.

India has been one of the two biggest markets that Apple has been trying to target in the last few years. The other such country has been China. With the population of over a billion, and a very fast-growing market for technology, not only is India a market for the hardware, but also space where Apple could do more than just utilize the market.

While in China, the government is not only hostile to foreign companies in general, but specifically hostile to American companies. Apple has over the years, faced many issues, including the recent ban of products off of the Apple Store.

In India, the situation is a little different.

The economic policies of the country have not been as favourable to Apple as it would like for them to be. The economic policies in India are designed in a manner for the government to be able to integrate them with the local trade and business.

What this simply means is that the policies include more taxes and other regulations to integrate the foreign brand with the local ones.

The rule that has been a bone stuck in Apple’s gullet is this — a regulation that requires foreign companies that have stores in the country to have at least 30% of their goods made in India.

This regulation was installed last year by the Modi government to promote local trade and products. The only exceptions to this rule are companies that “state of the art” or “cutting edge technology” products but even they have to apply for a waiver. Apple, with its cutting edge technology based products, did apply, and this week its waiver was denied.

For now the company has about 2–4% of the market share. Yet, despite that paltry sounding number, Apple for the first time exceeded USD 1 billion in sales in the country, this past year.

So far the company has been for the niche, for the business centric, and for those who can afford to spend money on their devices. But that’s like only dipping your finger on the icing on the cake and not really tasting the cake at all!

Apple has been trying to get to the Indian market in many ways. It has brought phones like the iPhone SE which was targeted directly at developing markets.
Not only that, Apple has also been bringing down the prices of its devices in India.

The cost-conscious Indian market has been very prone to go for devices by companies such as Samsung, Lenovo, Micromax, Xiaomi, Huawei, which bring high-end devices at lower costs.
To compete with that, another thing Apple planned to do was bring to the Indian market used second-hand devices at cheaper prices. Even that was denied permission by the government.

Apple could also gain from the start-up and entrepreneurial culture that India has seen in the last couple years. The IT abilities of the people in the country are unquestionably good, especially since after Bengaluru and Gurgaon turned into two of the biggest IT hubs in the world.
Not only are these the sites for most global companies to outsource their work to, they also gain tremendous resource-expertise from these highly talent-rich pools.

Apple’s CEO, Tim Cook has been certainly aware of this. During his recent visit to India, several detailed conversations and many negotiations took place with the government. But the meat of those conversations aren’t yet available for public consumption.

All in all, Apple is not just planning to bring its devices, but its brand altogether to India.
It recently even stated plans to open an office in India and invest about USD 25 million in it. This would bring a fair deal of employment to the area, and the country in general.

Sources say that Apple plans to open at least three or four stores in India by the end of 2017.

With this new regulation, it would be interesting to see how Apple goes about it, without having a manufacturing facility within the country. Apple has not made a statement in the regard yet.

Originally published at Chip-Monks.