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Government yet to decide on LeEco plea on local sourcing norms

The government is yet to decide on an application by Chinese smartphone maker LeEco, which is seeking a relaxation from the mandatory local sourcing requirement under the new foreign direct investment (FDI) rules, even three months after the company filed it.

By: | New Delhi | Published: September 23, 2016 6:50 AM
A LeEco spokesperson confirmed that the company is yet to get the nod. (AP) A LeEco spokesperson confirmed that the company is yet to get the nod. (AP)

The government is yet to decide on an application by Chinese smartphone maker LeEco, which is seeking a relaxation from the mandatory local sourcing requirement under the new foreign direct investment (FDI) rules, even three months after the company filed it.

According to the FDI norms notified on June 24, foreign entities having “state-of-the-art” and “cutting-edge” technology will get an exemption from the annual mandatory 30% sourcing rule for the initial three years and a “relaxed sourcing regime for another five years”.

Official sources told FE that the department of industrial policy and promotion (DIPP) — the nodal agency for filing such applications — has sought views of the department of electronics and information technology (DEiTY) on the company’s claim of selling products with “cutting-edge technology” to be eligible for the relaxation. A decision will be taken only after DEiTY submits its reply.

A LeEco spokesperson confirmed that the company is yet to get the nod. She, however, added: “We are hopeful of getting the approval soon. The government’s approach in the whole FDI issue is very encouraging.”

Currently, India allows 100% FDI in single-brand retailing, though foreign retailers are mandated to obtain the approval of the Foreign Investment Promotion Board if the FDI limit exceeds 49%.

Apple yet to apply afresh US tech giant Apple Inc hasn’t yet renewed its request for a relaxation from the local sourcing rule under the new FDI norms for setting up its own retail stores in India, according to official sources.

Under the earlier FDI norms, announced in November last year, entities having “cutting-edge” technology were promised complete exemption from the local sourcing rule. Apple had earlier applied for such a waiver, but the finance ministry rejected the proposal on grounds that such a blanket exemption would hurt the government’s ‘Make in India’ initiative following which new norms were notified in June.

Apple chief executive Tim Cook had reaffirmed in July his company’s plans for India, saying it was “looking forward to opening retail stores in
India down the road, and we see huge potential for that vibrant country”.

Analysts have said Apple turned to India to reverse slowing global sales, though its plan to establish retail outlets are still unclear. According to a Morgan Stanley report in April, India is expected to beat the US to become the second-largest market for smartphones next year.

iPhone sales fell for a second straight quarter, pushing down Apple’s total revenue 14.6% in the third quarter through June 25 this year. However, in India, iPhone sales have been rising, recording a 51% surge in the first three quarters of Apple’s current business year.

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