Thursday 4 October 2012

Apple may set up official retail stores in India

It appears that what was once a passing rumour that was shot down swiftly has resurfaced. Earlier this year, it was reported that Apple may open its retail stores in India, after already having set them up in countries such as the US, UK, Germany, France and China. Now according to a report by The Economic Times, this could become a possibility if the Indian government eases the local sourcing conditions.

As per the report, “Apple Inc, the maker of iPhones and iPads, is evaluating the possibility of setting up its own stores in India, if the Indian government eases local sourcing conditions, said two senior executives who have business relations with the California-based company in India.”

The authors state that the two sources have informed them that it would be easier for Apple to set up the Apple Retail Stores if the government allows its IT outsourcing operations in India to be incorporated as part of the required 30 per cent local sourcing requirement. “Undoubtedly, Apple is interested in setting up its own stores now that the demand for its product has increased. But it wants some flexibility in the 30 per cent sourcing norms. At present, it does not buy anything from India nor is it likely to source anything immediately, apart from IT services," one of the executives said, requesting anonymity.”

In January, a report by Livemint quoted an unnamed official of the Department of Industrial Policy and Promotion (DIPP), who said that Apple Inc may open its own shops after the Indian government allows full ownership of single-brand retail stores by foreign companies in the country. The maker of the iPad and iPhone has been in discussion with the department for some time, and is now keen to re-enter the Indian market after an earlier bid to do so in 2006, said the official on condition of anonymity. DIPP is the nodal department for foreign direct investment (FDI) policy.

Jaideep Mehta, Vice President and Country Manager of the market research firm IDC India, at the time had speculated that if a company such as Apple opens solely owned retail stores in India, the price of its products may go down, and that it can also ‘up the game in the retail category in the country due to the revolutionary nature of Apple’s retail front end.’

However, a later report stated that Tim Cook had quashed these rumours by stating that India was a growing market, yet still a small one. Hence, Apple has no plans in place to start a retail store in India. Even though Cook envisioned Brazil as the next big market, Apple has no plans to introduce its retail stores there either.

As of now, we have to wait and watch how the situation pans out.

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