Commerce ministry backs waiving of sourcing norms for Apple FDI

The Indian government is considering Apple Inc's application seeking waiver from local sourcing norms for investing in its retail chain in India, minister of state for commerce and industry Nirmala Sitaraman said on Monday.

She said her ministry is of the view that Apple with its high-end products qualifies for relaxation in FDI norms and that  it would discuss the issue with the finance ministry.

"We took a line that we wouldn't mind waiving off the local sourcing norm for Apple's high-end products," said Sitharaman

Apple was hoping to secure a hassle-free licence to open and operate retain stores in India. Besides, it wanted to resell used iPhones and iPads in the country, which would help it secure both market share and more profits.

While the government rejected the iPhone maker's demand that it may be allowed to sell second-hand phones in India, the foreign investment promotion board (FIPB) of the finance ministry wanted Apple to sell at least 30 per cent locally sourced products if it wished to open shops in India.

Apple wanted to expand its retail sales in India, one of the world's fastest-growing smart phone markets, at a time when sales in the United States and China have slowed.

Apple also was pinning hopes on the exemption granted to foreign retailers selling "state of the art" or "cutting edge technology" from the 30 per cent sourcing rule.

A panel set up by the commerce ministry had favoured waiving the sourcing requirement for the US-based phone-maker as it qualifies to be a provider of cutting-edge technology.

However, government officials with direct knowledge of the FIPB decision have stated that Apple's request was turned down as it failed to provide any material "on record" to back it.

"Finance ministry has taken a different line. We will talk to them," said Sitharaman

Sitharaman, however, said she was not in favour of relaxing rules for Apple to sell refurbished second-hand phones in India.