Local sourcing rules may still block Apple Stores from expanding into India

AppleInsiderAppleInsider
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in General Discussion
Apple may not have secured permission to open its first stores in India after all, though the company has not been shut out of the process, a report said on Tuesday.




India's Foreign Investment Promotion Board has ruled that Apple must follow rules requiring it to procure at least 30 percent of parts locally if it wants to sell through a single-brand store, sources informed Bloomberg. Apple was seemingly set to be granted an exemption, but the FIPB decided that it will not be approved.

The company's remaining chance lies in the fact that the FIPB's ruling must still be ratified by Finance Minister Arun Jaitley, the sources said.

On Saturday Apple CEO Tim Cook concluded a tour of India by speaking with Prime Minister Narendra Modi. Retail stores were one topic of discussion, and Cook may have tried to sway Modi and his administration into granting permission. Reports have suggested that Apple is already hunting for real estate, and planning to launch three stores within the next 18 months.

Apple's main assembly partner, Foxconn, is looking into building an Indian manufacturing plant. Until then, Apple will have no manufacturing footprint in India, leaving it unable to meet local sourcing requirements.

Comments

  • Reply 1 of 10
    isteelersisteelers Posts: 738member
    You have to "pay to play" as the saying goes.  Apple will pay and it will happen. This is just the negotiation phase.
  • Reply 2 of 10
    NY1822NY1822 Posts: 621member
    This report is probably factually true so far, but just going through the chain of command:
    step 1: Apple applies for retail store
    step 2: FIPB checks if the manufacture 30% in India. Finds they do not. Stamp DENIED on the paperwork.
    step 3: now it goes on to the next step.

    Read this: "Indian government approves apples bid..."
    http://iphone.appleinsider.com/articles/16/04/28/indian-government-approves-apple-bid-to-open-stores-free-of-30-sourcing-policy

    According to sources, a committee headed by Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek will recommend exempting Apple from a government mandate that requires foreign companies operating single-brand stores to source at least 30 percent of goods sold from domestic suppliers, The Times of India reported on Thursday.

    "The committee has found that the company's products are cutting edge technology and state-of-the-art. It has recommended to exempt them from the local sourcing norms," sources said.

    Read this: "First three Apple stores to open in India by end of 2017"
    http://iphone.appleinsider.com/articles/16/05/16/first-three-indian-apple-stores-rumored-to-launch-by-end-of-2017
    edited May 2016 patchythepirate
  • Reply 3 of 10
    applesauce007applesauce007 Posts: 1,698member
    India wants Apple to become an Indian company. They are out of their minds.  
    They try to bad mouth China to make India appear as a better opportunity for Apple.  In their wet dreams!
    I say screw them.  No Apple store for them.  Leave them in their 3rd World status.



    edited May 2016
  • Reply 4 of 10
    mike1mike1 Posts: 3,284member
    Rules mandating local content are just misguided. They believe they are creating jobs but only serve to raise the cost of products and limit the consumer's choice in those countries. This happens in many third-world countries, particularly in South America. Manufacturing growth in India needs to come organically. For example, Apple enters the market and begins selling phones made in China. If they're successful, at some point, it becomes more economical to produce the phones locally. That way the infrastructure also builds around that manufacturing base to support its growth. Perfect example of this in action is the fact that virtually every Toyota or Honda and many BMW, Mercedes and VW vehicles sold in North America (US/Canada/Mexico) are now built in the North America.
  • Reply 5 of 10
    antonpabloantonpablo Posts: 90member
    It's ok. It's not like they really need to have an Apple Store for the 5 people in India who can afford a ridiculously expensive iPhone.
  • Reply 6 of 10
    spaceraysspacerays Posts: 116member
    mike1 said:
    Rules mandating local content are just misguided. They believe they are creating jobs but only serve to raise the cost of products and limit the consumer's choice in those countries. This happens in many third-world countries, particularly in South America. Manufacturing growth in India needs to come organically. For example, Apple enters the market and begins selling phones made in China. If they're successful, at some point, it becomes more economical to produce the phones locally. That way the infrastructure also builds around that manufacturing base to support its growth. Perfect example of this in action is the fact that virtually every Toyota or Honda and many BMW, Mercedes and VW vehicles sold in North America (US/Canada/Mexico) are now built in the North America.
    Apple sold a ton of iPhones in USA. That didnt bring manufacturing to USA did it?
  • Reply 7 of 10
    joe28753joe28753 Posts: 82member
    spacerays said:
    mike1 said:
    Rules mandating local content are just misguided. They believe they are creating jobs but only serve to raise the cost of products and limit the consumer's choice in those countries. This happens in many third-world countries, particularly in South America. Manufacturing growth in India needs to come organically. For example, Apple enters the market and begins selling phones made in China. If they're successful, at some point, it becomes more economical to produce the phones locally. That way the infrastructure also builds around that manufacturing base to support its growth. Perfect example of this in action is the fact that virtually every Toyota or Honda and many BMW, Mercedes and VW vehicles sold in North America (US/Canada/Mexico) are now built in the North America.
    Apple sold a ton of iPhones in USA. That didnt bring manufacturing to USA did it?
    Manufacturing cars is a bit different. They're big and bulky, a large portion being "generic" materials like aluminum and plastic that gets molded, lots of the assembly is automated and robotic with some oversight. A larger percentage of the cost when looking at where to assemble is shipping costs and import duties. And they do source a lot of the parts from America when they assemble them here. Certain parts like the electronics may still come from the same places, but that's a small portion. For iPhones, it's mostly electronic chips and related items. Many of the components are made in China, Korea, and Japan, and couldn't really be moved to America. Then assembly requires a LOT of cheap manual labor. Forget about the cost of the labor for a minute, I honestly think they'd be hard pressed to even find enough workers at all in America to do the assembly. Then add on the cost of shipping the components around the world separately, possibly import duty or tax implications, it really makes no sense for them to make iPhones in America unless you want them to cost like 5 times as much.
  • Reply 8 of 10
    cnocbuicnocbui Posts: 3,613member
    spacerays said:
    mike1 said:
    Rules mandating local content are just misguided. They believe they are creating jobs but only serve to raise the cost of products and limit the consumer's choice in those countries. This happens in many third-world countries, particularly in South America. Manufacturing growth in India needs to come organically. For example, Apple enters the market and begins selling phones made in China. If they're successful, at some point, it becomes more economical to produce the phones locally. That way the infrastructure also builds around that manufacturing base to support its growth. Perfect example of this in action is the fact that virtually every Toyota or Honda and many BMW, Mercedes and VW vehicles sold in North America (US/Canada/Mexico) are now built in the North America.
    Apple sold a ton of iPhones in USA. That didnt bring manufacturing to USA did it?
    Designed in California is local content.  Many thousands of people are employed in high value jobs doing that.  The A series processors Apple contracts from Samsung are made in Austin.
  • Reply 9 of 10
    apple ][apple ][ Posts: 9,233member
    All of these third world countries and their corruption and other BS must be pretty annoying for Apple and Tim Cook to have to deal with.
  • Reply 10 of 10
    mike1mike1 Posts: 3,284member
    joe28753 said:
    spacerays said:
    Apple sold a ton of iPhones in USA. That didnt bring manufacturing to USA did it?
    Manufacturing cars is a bit different. They're big and bulky, a large portion being "generic" materials like aluminum and plastic that gets molded, lots of the assembly is automated and robotic with some oversight. A larger percentage of the cost when looking at where to assemble is shipping costs and import duties. And they do source a lot of the parts from America when they assemble them here. Certain parts like the electronics may still come from the same places, but that's a small portion. For iPhones, it's mostly electronic chips and related items. Many of the components are made in China, Korea, and Japan, and couldn't really be moved to America. Then assembly requires a LOT of cheap manual labor. Forget about the cost of the labor for a minute, I honestly think they'd be hard pressed to even find enough workers at all in America to do the assembly. Then add on the cost of shipping the components around the world separately, possibly import duty or tax implications, it really makes no sense for them to make iPhones in America unless you want them to cost like 5 times as much.
    Right. And India already has the cheap labor to make it economically feasible. Just not the manufacturing infrastructure. That is why it needs to follow the demand, not vice-versa.
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