Government relaxes local sourcing norm for tech innovators

Govt relaxes local sourcing norm for tech innovators.

By: ENS Economic Bureau | New Delhi | Published: July 21, 2016 2:47 am
Apple local sourcing, local sourcing norms exemption, foreign single-brand retail companies, Apple local sourcing, Apple retail store, india news Apple will be given the flexibility to source an average of 30 per cent locally over a five-year period once the 3-year exemption from the sourcing rule is over. (AP Photo/Ng Han Guan)

The Cabinet on Wednesday approved a three-year exemption from 30 per cent annual local sourcing required for foreign single-brand retail companies with “cutting-edge technology”, paving the way for global players like Apple to open their first retail store in India.

Also, companies like Apple will be given the flexibility to source an average of 30 per cent locally over a five-year period once the 3-year exemption from the sourcing rule is over. These changes were announced last month by the Department of Industrial Policy and Promotion. Upon completion of the first 3 years, such entities will be given 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. However, by the end of the fifth year, such entities must have sourced an average of 30 per cent locally over that five-year period. This means they may not strictly adhere to the annual 30 per cent sourcing rule in any of those five years. Once the relaxed regime is over, they are mandated to comply with the mandatory 30 per cent sourcing rule every year.

Apple’s technology has already been described as “cutting-edge” by a government panel headed by DIPP secretary Ramesh Abhishek. Similarly, Chinese firm LeEco will be subjected to the same conditions if its claim of having “cutting-edge” technology is endorsed by the panel. However, another Chinese company Xiaomi, which recently withdrew application for such a waiver, will have to comply with the mandatory 30 per cent sourcing rule from the beginning should it wish to set up its own retail store. The latest move assumes significance after conflicting signals in recent months over Apple’s bid to set up shop in India. FE

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