India considers easing sourcing rules that may help Apple

New Delhi: India is considering relaxing local sourcing norms for foreign companies that sell only their own brand, a move that is likely to encourage Apple Inc. to set up stores, people with knowledge of matter said.

According to the proposal, export of goods from a foreign company’s factory in India will be accounted as local sourcing, the people said, asking not to be identified as as the matter is not public. The time needed to meet the sourcing norms will be raised to eight years from five years. The change, piloted by the commerce and industry ministry, will be approved by the cabinet soon.

Under the current policy, a foreign company needs to purchase at least 30% of the product locally. The rule has been a sore point for many companies including Apple. Commerce and industry spokeswoman wasn’t immediately available for comment.

Apple has been in talks with officials in India to enter the fastest-growing smartphone market in the world and tap a larger share as China stagnates. It has been a minor player in India, in part because of its high prices, but local manufacturing would help the Cupertino, California-based company avoid import duties of 20%.

Amid declining market share in China, Apple has been busy laying groundwork for its manufacturing in India. Foxconn Technology Group, its main partner, is running quality tests for the iPhone XR series and plans to begin mass production at a facility in southern India. Older models are already assembled at a Wistron plant in Bangalore.

Finance Minister Nirmala Sitharaman had announced easing local sourcing norms in the single brand retail sector to attract foreign investments as part of her budget speech on July 5.

India is also considering allowing such companies to open online stores before setting up physical shops.

India bars foreign investment in department stores that sell different brands.