Apple’s single brand proposal: Commerce Ministry to discuss with Finance Ministry

Commerce and Industry Minister Nirmala Sitharaman on Monday said her ministry has taken a line that the 30 per cent local sourcing requirement can be waived off for high-end technology products.

By: ENS Economic Bureau | New Delhi | Updated: May 31, 2016 1:06:54 am
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Following the finance ministry’s refusal to waive off the mandatory 30 per cent local sourcing norms for Apple Inc’s single-brand retail plan, commerce minister Nirmala Sitharaman said her ministry will again discuss the matter with finance ministry.

“For specifically the high-end technology products, we took a line that we wouldn’t mind waiving the 30 per cent local sourcing requirement. Now it is for finance (ministry), which has already taken a different position. We will certainly talk with them on that and see what best can be done,” Sitharaman said during a press conference.

On the proposal of sale of refurbished phones by Apple, the minister however stated that the government is not in favour of any company selling used phones.

“We are not in favour of any company selling used phones in the country, however certified they may be,” she said.

The Foreign Investment Promotion Board (FIPB), which comes under the Ministry of Finance, had last week approved the company’s proposal to open retail stores in India but sans the exemption for local sourcing norms. The company had given inadequate justification for claiming the exemption, according to government officials. Also, there was a view that waiving off the norm for Apple will invite similar requests from other smartphone manufacturers.

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Other companies such as Chinese smartphone makers Xiaomi and LeEco have also sought exemption from the local sourcing norms. Following a presentation by the Cupertino-based electronics manufacturer last month, a committee headed by the DIPP secretary had come to a conclusion that Apple’s products are indeed “cutting-edge” and had recommended that Apple should be given the exemption.

At present, the government allows 100 per cent foreign direct investment in single-brand retail trading, but requires the finance ministry’s approval if the proposed investment is over 49 per cent.

Apple’s chief executive officer Tim Cook visited India recently and met Prime Minister Narendra Modi to reportedly push the company’s plans of setting up single-brand stores in the country. India has proven to be a major market for Apple’s iPhone sales, which grew 56 per cent year-over-year in the country during the January-March quarter at a time when globally there was a 16 per cent fall in the number of iPhones sold.

At present, Apple does not have any wholly-owned store in India and sells products through distributors such as Redington and Ingram Micro.

On the proposed incentives for startups, Sitharaman said her ministry has suggested to the finance ministry to raise tax holiday for startups from three years to seven years.

Sitharaman said lots of inputs from startups have been received and “recommendations have gone to the finance ministry for extending the 3-year tax holiday to 7 years”.

The government has announced the action plan for startups and is continuously interacting with them, she said adding that allocation of Rs 1,100 crore has already been made and 35 new incubators have been established.

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