Apple may benefit from Government’s changes in FDI

 

Announcing major changes to the foreign direct investment (FDI) norms across sectors. the Union Cabinet had yesterday also announced that global single-brand retailers can operate in the country without the necessary permissions beyond 49 per cent foreign direct investment (FDI) that was mandatory till now.

Prime Minister Modi’s government’s relaxation of certain regulations and the tax system, has made it easier for foreign companies to operate on Indian soil.

This could be a good news for tech giant Apple as this would sound as waving of the green flag of the move to open of Apple-branded retail outlets in the country. This wasn’t possible earlier due to the regulatory hurdles that mandated government permission for FDI beyond 49 percent.

But one thing that is still a matter of concern for Apple is the 30 per cent local sourcing norms. It is said that Apple has a different set of problems and till the local sourcing clause is removed, the government permission waiver will not be enough to bring Apple stores and other global brands from coming to India.

“During the year 2014-15, total FDI inflows received were $45.15 billion as against $36.05 billion in 2013-14. During 2015-16, the country received total FDI of $55.46 billion. In the financial year 2016-17, total FDI of $60.08 billion has been received, which is an all-time high,” said a Press Information Bureau report.

The report claims that according to consulting firm PwC, the retail market in India is about $600 billion and could be as big as a $1 trillion by 2020.

“Organised retailers currently account for just 8 percent of the market, meaning India presents established global brands with “tremendous scope for growth,” PwC said in the report.

However, the new government policy is currently restricted to only single-brand retailers and there are no details for those who have many brands under the same roof.

It is also said that Walmart had been actively trying to open up its stores in India, but has so far been restricted to only 24 across the country.

 

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