Apple Inc. (NASDAQ:AAPL) India Retail Plan in Jeopardy Over Local Sourcing

Apple Inc. (NASDAQ:AAPL) might have been dealt a blow on its push to open retail stores in India. According to reports, the country’s finance minister has stood his ground reiterating that the company must meet it anti-free market local sourcing rules if it is to open any stores.

Story continues below

India’s Industrial Policy

Apple will have to procure 30% of its components used from local sources if it is to make its devices in India in order to be allowed to operate outlets. India requires companies to make their products there as part of its industrial policy. The policy has so far led to the creation of thousands of jobs for locals at the expense of other Indian consumers who buy the products they make at higher prices, as foreign companies move to take advantage of the vast consumer base.

Given that Apple makes most of its devices in China it could struggle to meet the requirement. However, the requirement could still be overturned in favor of the tech giant, but it will require the intervention of the Prime Minister.

Expanding Into India

The hard stance by regulators comes just days after CEO Tim Cook visited the country all in the effort of ramping support for the tech giant. It will be interesting to see how the iPhone maker will address the standoff given that it is increasingly looking to expand its footprint in India.

The second most populous nation in the world has become an attractive prospect for many multinationals looking for new opportunities for growth. The smartphone marketplace there is ranked the fastest growing in the world, the likes of China and US having clocked saturation levels.

Apple is looking to capitalize on India’s smartphone marketplace having suffered major setbacks in developed countries on iPhone sales. Given that the company has a small market share there, it hopes that by opening its own retail stores its will be able to bolster its prospects.

By opening such facilities, Apple should be able to make a name for itself on the sale of high-end devices as Android continues to call the shots on the sale of sub $250 smartphones.

An ad to help with our costs