tech2 News StaffAug 30, 2019 15:49:18 IST
The ongoing US-China war has created a new opportunity for companies to invest in India and the country is reciprocating by relaxing FDI (foreign direct investment) rules for single-brand retail trade (SBRT). This new policy could help expand the online and offline markets in India as well as offering companies more flexibility on local sourcing norms.
Many smartphone giants such as OnePlus, Oppo, Apple and more underlined a long-term commitment to the Indian market thanks to the ease in FDI rules. For the uninitiated, single-brand retail companies that had more than 51 percent FDI in India had to locally source a minimum of 30 percent for total sales in the country.
With the Indian government now relaxing this limit, tech giants such as Apple can start selling a range of products in India through their own online store instead of depending on third-party vendors like Flipkart and Amazon.
Apple had said in a statement to CNBC that "appreciate support &hard work by PM Modi &his team to make this possible&we look forward to one day welcoming customers to India’s first Apple retail store. Will take us some time to get our plans underway &we’ll have more to announce at a future date." This could mean that Apple could soon unveil it's highly anticipated offline retail store in India.
It's just not Apple but also the companies which assemble iPhones such as Foxconn and Wistron Corp that are in a list of 'target companies' being encouraged to set up more operations in India.
Chinese smartphone maker OnePlus has said that the new FDI rules would help the company scale up operations in India. "OnePlus is committed to deepening its local manufacturing operations and is looking to scale up its production facilities to support exports to global markets," OnePlus India General Manager Vikas Agarwal told PTI.
However, OnePlus is not ready to make any investments based on short-term opportunities. The company said in a statement to PTI, "We have a long term view for offline expansion and are already setting up offline stores across all major cities through our local partners. Given that regulations are still evolving and may change further in the near future, we will stick to our long term approach and avoid making any strategic investments based on short term opportunities."
Other Chinese giants such as Oppo and Vivo are emboldened by this new approach by the Indian government.
Nipun Marya, Director Brand Strategy at Vivo India, said the company is aligned with the Make In India' initiative. "With the easing of restrictions on SBRT, we look forward to giving our consumers top of the line retail experiences which can successfully showcase Vivo's innovation capabilities," Marya said.
Sumit Walia, VP Product and Marketing at OPPO India, said the government's latest move will "accelerate growth by stimulating investments and create more employment opportunities".
"Consumers will stand to benefit with access to a wider variety of products, at both online and offline platforms which are of paramount importance to provide a holistic experience to consumers," Walia said.
Counterpoint Research Associate Director, Tarun Pathak says "The policy is well thought out, keeping in mind the complex industry practices and global sourcing strategies. It opens a broader window for foreign companies to now consider India as their global sourcing hub... Under new rules, the entire sourcing from India for global operations shall be considered towards local sourcing requirement."
India is among the world's largest smartphone markets and continues to grow at a strong pace — making it an attractive destination for global brands. In the April-June quarter this year, about 37 million smartphones were shipped, as per Counterpoint Research.
While the market was led by brands like Xiaomi and Samsung, Apple and OnePlus (that play in the premium category) had 1.2 percent and 2 percent share, respectively. Vivo had an 11 percent share of the shipment, while OPPO accounted for 8 percent share in the second quarter.
Industry body ICEA had also has said the relaxation in FDI norms for single-brand retail trade is expected to raise the domestic mobile handset retailing market to global standards as it paves the way for brands like Apple, OnePlus and Oppo to set up their directly-owned stores in the country.
The mobile handset industry in India, specially the smartphone segment, is expected to witness a surge in turnover during the next 4-5 years with the domestic market demand expected to soar from the current $25 billion to $80 billion by 2025, as per the National Policy on Electronics (NPE), 2019, India Cellular and Electronics Association (ICEA) had said.
With inputs from agencies
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