FDI rules revamp to fuel offline, online expansion of global brands, say phone makers

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Published: August 29, 2019 9:16:52 PM

Global phone makers like Apple, OnePlus and Vivo on Thursday underlined their long-term commitment to the Indian market and said the recent easing of FDI rules for single brand retail trade (SBRT) would bolster plans for offline and online expansion.

US tech titan Apple has also stated that it is keen on offering online and in-store experiences to Indian users that are at par with its global standards, and aims to open its maiden retail store in India

Global phone makers like Apple, OnePlus and Vivo on Thursday underlined their long-term commitment to the Indian market and said the recent easing of FDI rules for single brand retail trade (SBRT) would bolster plans for offline and online expansion. The government, on Wednesday, eased the FDI norms for single-brand retail, offering players more flexibility on local sourcing norms.

It also did away a provision that required companies to mandatorily set up a brick-and-mortar store before getting into online retail trading. “OnePlus is committed to deepening its local manufacturing operations and is looking to scale up its production facilities to support exports to global markets,” OnePlus India General Manager Vikas Agarwal told PTI. He added that the new regulations will attract others brands to invest locally and accelerate development of local manufacturing ecosystem.

“We have a long term view for offline expansion and are already setting up offline stores across all major cities through our local partners. Given that regulations are still evolving and may change further in the near future, we will stick to our long term approach and avoid making any strategic investments based on short term opportunities,” Agarwal said.

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Nipun Marya, Director Brand Strategy at vivo India, said the company – which has recently announced Rs 7,500 crore investment plan – has been fully aligned with the ‘Make In India’ initiative. The decision will promote more foreign investments in the Indian manufacturing sector, improve consumer’s product experience, usher in significant growth of handset demands and create many jobs in India in the long run, he added. “With the easing of restrictions on SBRT, we look forward to giving our consumers top of the line retail experiences which can successfully showcase vivo’s innovation capabilities,” Marya said.

Many international players like Apple, OnePlus and others currently sell their devices in the Indian market through franchise-owned retail stores, apart from the e-commerce channels like Flipkart and Amazon. Counterpoint Research Associate Director, Tarun Pathak said the new local sourcing policy has taken a more global approach now.

“The policy is well thought out, keeping in mind the complex industry practices and global sourcing strategies. It opens a broader window for foreign companies to now consider India as their global sourcing hub…Under new rules, the entire sourcing from India for global operations shall be considered towards local sourcing requirement,” he said adding that this is good news for brands like Apple, OnePlus, Oppo and vivo as all these brands are expanding their presence in the premium smartphone category. In such a scenario, having retail operations enabling them to control end-to-end consumer experience will work from both brand image and customer retention point of view, he opined.

US tech titan Apple has also stated that it is keen on offering online and in-store experiences to Indian users that are at par with its global standards, and aims to open its maiden retail store in India. India is among the world’s largest smartphone markets and continues to grow at a strong pace – making it an attractive destination for global brands. In the April-June quarter this year, about 37 million smartphones were shipped, as per Counterpoint Research.

While the market was led by brands like Xiaomi and Samsung, Apple and OnePlus (that play in the premium category) had 1.2 per cent and 2 per cent share, respectively. vivo had 11 per cent share of the shipment, while OPPO accounted for 8 per cent share in the second quarter. Sumit Walia, VP Product and Marketing at OPPO India, said the government’s latest move will “accelerate growth by stimulating investments and create more employment opportunities”.

“Consumers will stand to benefit with access to a wider variety of products, at both online and offline platforms which are of paramount importance to provide a holistic experience to consumers,” Walia said. Industry body ICEA had also has said the relaxation in FDI norms for single-brand retail trade is expected to raise the domestic mobile handset retailing market to global standards as it paves the way for brands like Apple, OnePlus and Oppo to set up their directly-owned stores in the country.

The mobile handset industry in India, specially the smartphone segment, is expected to witness a surge in turnover during the next 4-5 years with the domestic market demand expected to soar from the current USD 25 billion to USD 80 billion by 2025, as per the National Policy on Electronics (NPE), 2019, India Cellular and Electronics Association (ICEA) had said.

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