Apple’s hopes of opening up its first retail stores in India have been dealt a massive blow by the country’s finance minister. Arun Jaitley has decided that Apple must meet local sourcing rules just like other manufacturers if it wants to open its own retail locations.
“Minister Arun Jaitley decided to support the decision by India’s Foreign Investment Promotion Board that Apple will have to procure 30 percent of components locally if it wants to sell through its own retail stores,” reports Bloomberg.
This is a massive issue for Apple, which manufactures almost all of its products in China. India is becoming an increasingly important market for the company as smartphone adoption takes off there, with 1 billion handsets expected to be sold over the next five years.
“The government’s decision will have a pretty profound effect on Apple,” said Neil Shah, at Counterpoint Research. “The company typically likes to control every piece of the iPhone value chain right from sourcing components to the point of sale.”
Apple has met deal with local retailers to sell the iPhone in India, but opening its own stores could have given the device — and other Apple products — a massive boost. But it seems India’s strict retail laws could prevent that.
In an effort to encourage local manufacturing and increase the number of jobs, the Indian government stipulates that technology companies cannot sell products locally without investing in local manufacturing facilities.
This isn’t the end for Apple, though. Jaitley’s decision can still be overturned, but it may require intervention from Prime Minister Narendra Modi, who met with Tim Cook last week. However, there’s no doubt this will make things more difficult for the iPhone maker.