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 \u201cstate-of-the-art\u201d and \u201ccutting-edge technology\u201d will get exemption from the annual mandatory 30% sourcing rule for the initial three years and a \u201crelaxed sourcing regime for another five years\u201d once they set up their own stores in India. It, however, didn\u2019t define the \u201crelaxed sourcing regime\u201d. 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\u2019t 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\u00a0over, they are mandated to comply with the mandatory 30% sourcing rule every year. \u201cThe idea is to give them sufficient time to improve their sourcing and start manufacturing. The country will gain in terms of local\u00a0manufacturing of cutting-edge technological products and job creation,\u201d a source said. Apple\u2019s technology has already been described as \u201ccutting-edge\u201d 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 \u201ccutting-edge\u201d 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.