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Centre's move to relax FDI in single-brand retail trade may bring some relief for Apple in India

iPhone XS
(Image credit: Future)

India is the fastest-growing smartphone market in the world, yet Apple has struggled to find its footing in recent years. But a new set of rules might bring some relief to the company as it can now sell its products through its online store.

Hitherto, Apple and other foreign brands were not allowed to sell their products online in India, unless 30% of their components were sourced locally. The rule was to boost FDI in manufacturing sector in India rather than entirely importing the goods. This had been a difficult compliance for Apple as most of its components would come from China. A new ruling eases that threshold and should allow Apple to commence online sales, which could happen within months, states a report by Bloomberg.

Things may change

The change in policies comes at the right time as trade ties between the U.S. and China are on loggerheads, and makes India a conducive alternate destination for electronics brands such as Apple. This could be followed by the Cupertino company to increase local manufacturing efforts and thus avoid the heavy import duties that it currently faces.

In the coming months, consumers may be able to buy iPhones, iPads and Macs online in India directly from Apple, which should go a long way in fighting counterfeit products that are seen aplenty in India. Not just that, Mumbai could also see Apple open its first store in India as early as next year.

The only level of localisation that Apple had been doing was the assembly of older iPhones in Bangalore via Wistron Corp. Foxconn, which is the world’s largest contract manufacturer and handles the mass production of most of Apple’s offerings, is also testing the assembly of newer models including the iPhone X. Currently, iPhones are subject to a 20% import duty which makes them even more expensive, and thus undesirable in a price-sensitive market such as India.

Apple’s market share in India has declined to less than 1%, in the same period where Xiaomi and OnePlus entered the market and went on to become leaders in their respective segments. Competitive pricing is one of the main reasons for its quick success.

India is the second-most populous country in the world, and still has a big chunk of people that do not use smartphones. One in five smartphones sold in the country is through online channels, indicating a huge opportunity for Apple, which already has desirability in India.