In India, Foreign Retail Won't Take No For An Answer

Retailers Push India For Cross-Border Flexibility

What Apple wants, Apple usually gets. Usually being the operative word here.

There was no mistake about Cupertino's cross-border commerce intentions when CEO Tim Cook took a highly publicized trip around India in mid-May, and the point was hammered home when Cook pledged $25 million to build an innovation hub in Hyderabad that would eventually employ 150 people on Apple Maps projects. When Cook and Prime Minister Narendra Modi met to cap the trip off, it seemed a forgone conclusion that Apple would get what it was looking for: an exemption from a regulation requiring foreign-owned retailers to source at least a third of their manufacturing from local Indian sources.

That was the key to Apple opening up shop in India, and when it didn't materialize, it came as a not-insignificant shock to the retail world. Why wouldn't India want to let in a driver of economic growth like Apple? Why wouldn't the Modi government want to work with, instead of against, Apple to foster cross-border commerce on both sides of the equation?

Few concrete answers appeared a month ago, but it could soon be a moot issue. Now, it seems as if the Indian government is ready to waive the manufacturing sourcing requirement and allow Apple to set up shop all over the Indian subcontinent.

The Times of India was the first to report the news, courtesy of sources privy to discussions between the Ministry of Finance and the Department of Industrial Policy and Promotion. The plan, as it stands, is to give Apple the keys to the car with the understanding that it would slowly transition to a compliant supply chain that did locally source at least a third of materials from Indian locations. While rumors that Apple and manufacturing partner Foxconn are ruminating on a $10 billion iPhone assembly facility in India may have helped preemptively grease some palms, all that's known at this point is that, first, India was against capitulating to Apple, and now, it's not.

"It is only fair to insist on some local production and two, three years is a reasonable period," one of the anonymous sources told The Times of India. "Five years may be too long."

It's impossible to know exactly where this rumored change of heart came from, and if it does materialize into policy, the major takeaway will be clear as day: India would rather be a part of a future of cross-border commerce now than sit back and wait for the perfect conditions to do so.

With Apple, a company that is just now seeking to break into the Indian market, this may have been a relatively straightforward decision. However, an even bigger struggle with Amazon over protectionist policies could be brewing, particularly in light of CEO Jeff Bezos' commitment to invest an additional $3 billion into its Indian operations, bringing the post-2014 tally to a combined $5 billion. Unlike Apple, Amazon is already selling in the country, and at the moment, all is hunky-dory in regards to India's eCommerce regulations.

As often happens in love and war and retail, though, star-crossed fates conspire to unsettle these cozy relationships.

According to regulations that went into effect earlier this year, it's no longer an issue for entirely foreign-owned eCommerce companies like Amazon to sell to Indian consumers. What's not entirely copacetic are non-domestic companies that do more than simply provide a space where sellers and buyers can hash out a deal — such as, oh, selling private-label goods directly to consumers on top of everything else.

India forcing Amazon not to sell its own products would be a coup not seen this side of the prime meridian in ages, and it would be an even rarer thing indeed if it managed to push back against the eCommerce giant when it seems to be folding under the weight of Apple alone. It's not like either side truly loses out on these deals, so maybe, that's why the Indian government isn't putting up too much of a fight.

But it's a fair assumption that Myntra, Flipkart, Snapdeal and others would rather it did.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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