The Department of Industrial Policy and Promotion (DIPP) has asked iPhone-maker Apple to re-submit its application for opening retail stores in India because the previous one submitted in January was not in the right format. The DIPP has noted certain gaps in Apple's proposal, and sought more information. No time-frame has been set for final approval.
India's laws permit owners of single brands to run retail stores without a local partner whereas companies such as Wal-Mart that have several brands need a local partner, besides other approvals.
Apple has no wholly-owned store in India and sells its products through distributors such as Redington and Ingram Micro. India is one of the largest smartphone markets in the world and is expected to witness growth in the number of smartphones to over 650 million in the next four years, a study by networking solutions giant Cisco said in 2015. Apple has only a 2% market share.
In January 2012, the rule governing single brand retailers was relaxed as the government allowed 100% ownership by foreign companies in the sector so long as the retailer sources 30% of its goods from India.
In Apple's case, this may not be possible as the company had stated that it could not develop the superior technology it uses in its phones unless a strong manufacturing base was set up. Now, sources in the Indian government have said this rule may also be relaxed as state-of-the-art and cutting edge technology is not possible to be locally sourced.
Even though 100% Foreign Direct Investment is permitted in the sector, if Apple wants to operate on its own beyond 49%, which looks like it will, it needs an additional clearance from the Foreign Investment Promotion Board (FIPB). This may take time and it is not clear at this stage how much.
Indian Prime Minister Narendra Modi has been trying to cut the red tape and open up the economy since taking power in May 2014. During his visit to the US in 2015 he met Apple CEO Tim Cook and wanted Apple to start manufacturing in India.