India relaxes FDI regulations for Apple amidst economic slowdown


India has further liberalized its foreign direct investment (FDI) rules for many sectors, opening new avenues for global investors and giants such as Apple as Asia’s third-largest economy attempts to jump-start its years-low economic growth.

Indian government said that it is easing sourcing norms for single-brand retailers like Apple. As part of the new proposal, which has been approved, the government said single-brand retail companies will be allowed to open online stores before they set up presence in the bricks-and-mortar market.

This would allow Apple, which has yet to set up retail stores in the country, to start selling a range of products through its own online store. Currently, Apple sells its products in India through partnered third-party offline retailers and e-commerce platforms such as Amazon India, Flipkart and Paytm Mall.

Over the years, Apple has requested the government numerous times to relax the local foreign direct investment (FDI) rules. Company executives have long expressed disappointment at Amazon India, Flipkart and Paytm Mall for offering heavy discounts on the iPhone and MacBook Air to boost their respective GMV metrics.

Apple had urged the government previously to ease this requirement as well. India has emerged as one of the world’s biggest battlegrounds for smartphone vendors. As sale of smartphones slows or declines in nearly every corner of the world, Indians are showing a growing appetite for handsets.

The local smartphone market, which is the fastest growing globally and also second largest, was once commanded by local smartphone manufacturers. But things have dramatically changed in recent years with Chinese phone makers such as Xiaomi, Vivo, OnePlus, Oppo and Realme and South Korean giant Samsung together controlling 90% of the market.

Apple continues to largely focus on users looking for a premium smartphone in India. Even as the iPhone maker’s market share in India stands below 2%, per research firms IDC, Counterpoint and Canalys, Apple CEO Tim Cook has said on a number of earnings calls that the company sees major opportunity in India.

To boost sales in India, Apple has started to assemble several iPhone models locally and reached a stage where it can begin to export to overseas markets phones produced in India. Assembling phones in India allows Apple — as it does other phone makers — to enjoy some tax benefits that Indian government provides.

As part of announcement, the government is now also allowing foreign investment in digital media to take up to 26% stakes in companies — a figure that now stands at 100% for the coal mining industry and associated infrastructure and sales of fuel.

India’s move today comes as the nation grapples with a slowing of economic growth. The economic growth in the quarter that just ended stood at 5.8%, the lowest in last five years. Indian government is hoping to overcome this economic slowdown that has had an adverse impact on employment.


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