India Said to Clarify Apple’s Path to Opening Own Retail Stores

(Bloomberg) -- India’s finance minister has approved a proposal that clarifies how Apple Inc. could open stores in the fast-growing economy without initially having to source components locally, people familiar with the matter said.

Arun Jaitley ratified a proposal that gives the information technology ministry the power to label a retailer of a single brand as a provider of cutting-edge technology, the people said, asking not to be identified as the move isn’t public. Such a classification would give Apple a three-year exemption from rules that force some foreign retailers to procure 30 percent of components in India, they said. The company makes most of its goods in China.

The Cupertino, California-based manufacturer of iPads and iPhones can now reapply to open stores in the nation with greater odds of winning the waiver because of the latest decision, the people said. An earlier application failed to get the exemption after a finance ministry department hesitated to take a call on whether Apple products are cutting edge. The latest step is an effort to clear up that confusion, the people said.

Chief Executive Officer Tim Cook is trying to capitalize on growth prospects in the $2 trillion Indian economy of 1.3 billion people, where smartphone usage is burgeoning but Apple’s market share trails rivals selling cheaper devices. A byzantine bureaucracy and complex rules remain a challenge for many local and overseas businesses striving to tap India’s potential.

Apple has used flagship stores in New York, Tokyo and Shanghai to boost sales, but in India sells through partners such as Redington India Ltd.

D. S. Malik, a finance ministry spokesman, couldn’t be reached for comment. Apple in India didn’t immediately reply to an e-mail seeking comment.

Officials are keen on encouraging domestic manufacturing under Prime Minister Narendra Modi’s so-called Make in India program. In June, a senior government official said the administration was seeking a time-frame from Apple for some local production eventually.

--With assistance from Saritha Rai To contact the reporter on this story: Siddhartha Singh in New Delhi at ssingh283@bloomberg.net. To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Sunil Jagtiani, Robert Fenner