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Apple may yet be allowed to roll out retail stories in India

The Indian government may exempt Apple from local component sourcing rules, but only for the first two or three years, says the Times of India.

Apple may open up its first retail shops in India after all.
James Martin/CNET

Apple's on-again, off-again bid to open up retail shops in India seems to be on again.

The iPhone maker has been chatting with the Indian government about launching its first retail outlets in the country. But there's been a snafu. Companies that wish to open retail stores in India are required to buy at least 30 percent of the parts for their products from local manufacturers. Apple acquires almost all of its components from China.

Initially, an Indian government committee had recommended that Apple be granted an exemption. The country's Foreign Investment Promotion Board reportedly nixed that idea, instead insisting that Apple follow the sourcing policy. Well, now the exemption apparently is back on the table, but with one caveat.

Apple would be allowed to set up its first retail stores in the country without having to follow the local sourcing requirement, but the exemption would be good only for the first two to three years, The Times of India reported on Monday. During that time, Apple would be expected to work out agreements with local manufacturers under which it would be able to buy its components locally and eventually meet the local sourcing rules.

As the fastest-growing smartphone market in the world, India represents a key opportunity for Apple. The company sells its iPhone, iPad and other products in India online and through resellers. Its market share in the country is only about 2 percent, but iPhone sales in India jumped by 56 percent last quarter. Retail outlets could lift sales even further by giving consumers the opportunity to check out products and speak with customer service reps in person.

India's finance ministry and its Department of Industrial Policy and Promotion (DIPP) have been talking about waiving the local sourcing rules for Apple during the first few years, the Times of India said. Apple has already been buying some of its chargers from Indian vendors, the Times added. The notion is that the company would increase its local purchasing as it establishes a greater retail presence.

Last month, Apple CEO Tim Cook met with Indian Prime Minister Narendra Modi. The talks led to an announcement by Apple that it would set up an iOS design and development accelerator and a Maps development center in the country, the latter of which would employ up to 4,000 people, according to the company.

Apple did not immediately respond to CNET's request for comment.