India liberalises foreign direct investment to boost economy

Apple Inc on Thursday welcomed India’s decision to relax rules on foreign direct investment (FDI) and said it is eager to open its first retail store in the country.

The California-based company said in a statement that it appreciated Indian Prime Minister Narendra Modi’s support for the new rules, which eased a 30 per cent local sourcing requirement for single-brand retailing and permit online sales without the prior opening of brick-and-mortar stores.

Apple couldn’t open a store in India because it wasn’t prepared to meet the 30 per cent requirement.

Apple products are presently sold in India through franchise stores, with tough competition from South Korean and Chinese smartphone makers.

“We love our customers in India and we’re eager to serve them online and in-store with the same experience and care that Apple customers around the world enjoy,” Apple said.

Modi’s government decided on Wednesday to liberalise foreign direct investment in domestic manufacturing, coal mining and digital media, and also allow single-brand retailers to start online sales to infuse capital into the country and boost its economy.

Commerce and Industry Minister Piyush Goyal said the Cabinet approved 100 per cent foreign direct investment in coal mining and associated infrastructure. He said it also approved 100 per cent foreign investment in contract manufacturing and up to 26 per cent investment in digital media.

The government made the decision as it grappled with a slowing of economic growth to a five-year low of 5.8 per cent in the January-March quarter, with consumer spending and corporate investment faltering. Declining industrial output and automobile sales also raised fears of a deeper slowdown.

The Indian government also relaxed the 30 per cent local sourcing requirement in single-brand retailing and permitted online sales without the prior opening of brick-and-mortar stores.

“Online sales will lead to the creation of jobs in logistics, digital payments, customer care, training and product-skilling,” Goyal said.

“The changes in foreign direct investment policy will result in making India a more attractive FDI destination, leading to the benefits of increased investment, employment and growth,” he said.

Last week, the government also rolled back a surcharge on foreign portfolio investment and announced steps to lower interest rates on home and auto loans to shore up the economy.

Rajiv Kumar, chairman of the government-run Policy Commission, called for immediate steps by the government to tackle poor liquidity and weak private investment. He warned that India has not faced this kind of a situation for 70 years.

– AP