How Apple is set to get relief in India from rules

By: and | Updated: June 22, 2016 12:21 PM

If Apple sets up its own retail store in India, the American tech giant could be given the flexibility to source an average of 30% locally over a five-year period once the three-year exemption from the mandatory sourcing rule is over.

Apple’s technology has already been described as “cutting-edge” by a government panel headed by DIPP secretary Ramesh Abhishek. Similarly, Chinese company LeEco will be subjected to the same conditions if its claim of having “cutting-edge” technology is endorsed by the panel. (Reuters)Apple’s technology has already been described as “cutting-edge” by a government panel headed by DIPP secretary Ramesh Abhishek. Similarly, Chinese company LeEco will be subjected to the same conditions if its claim of having “cutting-edge” technology is endorsed by the panel. (Reuters)

If Apple sets up its own retail store in India, the American tech giant could be given the flexibility to source an average of 30% locally over a five-year period once the three-year exemption from the mandatory sourcing rule is over.

The government announced on Monday that foreign entities having “state-of-the-art” and “cutting-edge technology” will get exemption from the annual mandatory 30% sourcing rule for the initial three years and a “relaxed sourcing regime for another five years” once they set up their own stores in India.

It, however, didn’t define the “relaxed sourcing regime”.

Sources told FE that upon completion of the first three years, such entities will be given the flexibility to source according to their operational needs for the next five years so that they don’t face much of a problem to enhance their manufacturing base and step up local sourcing.

However, by the end of the fifth year, such entities must have sourced an average of 30% locally over that five-year period.

This means they may not strictly adhere to the annual 30% sourcing rule in any of those five years.

And once the relaxed regime is over, they are mandated to comply with the mandatory 30% sourcing rule every year.

“The idea is to give them sufficient time to improve their sourcing and start manufacturing. The country will gain in terms of local manufacturing of cutting-edge technological products and job creation,” a source said.

Apple’s technology has already been described as “cutting-edge” by a government panel headed by DIPP secretary Ramesh Abhishek. Similarly, Chinese company LeEco will be subjected to the same conditions if its claim of having “cutting-edge” technology is endorsed by the panel.

However, another Chinese smartphone maker, Xiaomi, which recently withdrew its application for such a waiver, will have to comply with the mandatory 30% sourcing rule from the beginning should it wish to set up its own retail store.

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