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    Indian Government Rejects Apple’s Application

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    Varun Bhatia
    Varun Bhatia May 26, 2016

    When we heard that the Apple Stores were coming to India, we were ecstatic. Then we heard that there were a few restrictions that Apple might not want to comply with, and that made us a little bit sad.Then there was a possibility that the Indian Government might change the rules for Apple. We were jubilant again!

    But, just when we thought that our emotional roller coaster ride was over, we get this bad news:

    The Indian government has announced that it will NOT change the rules for Apple. 

    This comes right after Tim Cook concluded his high-profile visit to India. One wonders what Cook achieved in those talks with the Prime Minister. The government doesn’t seem any more inclined to do any favours for him.

    Wait I’m lost. What’s the fuss all about?

    We have a rule that any foreign brand wanting to open its own retail stores in India must procure 30% of raw materials right here. However, the government has a provision to waive this requirement if the company is selling “state of the art” or “cutting-edge technology”.

    Apple had applied for a waiver recently, and the government “was considering it.” Now, they have decided that Apple doesn’t fulfil those criteria.

    Looks like Modi just sent to Tim Cook, a copy of this:

    Neil Shah, the director at Counterpoint Research (a market research firm specialising in tech industry), had this to say:

    The government’s decision will have a pretty profound effect on Apple. The company typically likes to control every piece of the iPhone value chain, right from sourcing components to the point of sale. Having complete control has been key to its strategy.

    This is the second major setback for Apple after the government turned down Apple’s idea of importing refurbished iPhones to India. That was a large part of Apple’s strategy to grow in India, but now it looks like a far-fetched dream!

    Apple still relies on third-party stores to sell its products. They are enough to get the job done, but not nearly premium enough to live up to Apple’s high-quality ambitions.

    Apple may not want to compromise on control, but we think it’s a small price for them to pay if it means long-term brand presence and a good chunk of market share. Those are the prizes that Apple should be fixing its eyes on.

    We feel Apple will have the good sense to accept the rule and not crib a lot about it. After all, India is Apple’s one last hope! So —

    Give a little, gain a little; let’s all live a life of compromise!

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