Dive Brief:
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The Indian government announced Monday that it has officially rejected Apple's plan to sell refurbished iPhones in the country.
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The announcement comes as Apple tries to establish a presence in the country, which has been hampered by requirements that at least a third of goods sold be locally sourced. But India's commerce and industry minister Nirmala Sitharaman gave Apple some hope Monday, saying that the government is considering the company's waiver of the rule.
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New rules issued last month by the Indian government’s Department of Industrial Policy and Promotion helped clear up some confusion in establishing e-commerce businesses in country, but may have solidified the challenges for physical retail even further.
Dive Insight:
Apple CEO Tim Cook has personally met with Indian government officials, including prime minister Narendra Modi, as recently as this month, and has noted that the country holds huge potential for Apple. The recent ruling that Apple won't be permitted to sell refurbished iPhones in the country is a big hit, as it would have allowed the premium phone brand to better compete in a market where cell phones usually sell for under $150.
The country, with a population that includes a large young, mobile-first generation and a growing middle class, presents a lot of growth potential for any retailer—especially at a time when many global retailers are looking to diversify their ambitions beyond China, which has seen growth slow.
But India's arcane foreign-investment rules, designed to protect local manufacturing and stores, have prevented many retailers from setting up shop. As of last year, companies defined by the government as “cutting edge” are also exempt from the 30% rule, but government officials appear to be reluctant to provide Apple a path on those grounds, according to Fortune.
India's "modern trade" (including mall-based stores, chain stores and brands) is increasing 15% to 20% each year (though countrywide, it enjoys a lower organized retail penetration of 8%), according to PricewaterhouseCoopers. Meanwhile, a study from the Internet and Mobile Association of India last year found there were 52 million new Internet users there in the first six months of 2015, bringing the country’s total user base to 352 million as of June. And of those, 213 million—more than 60%—accessed the web through their mobile devices.