Indian government has provided a reprieve of 30% source requirement to Apple
According to Times of India, the government of India has provided Apple Inc. (NASDAQ:AAPL) with a 2-3 year exemption for opening its own retail outlets across the country without any kind of sourcing requirement mandatory for the company.
As per the agreement, the waiver of sourcing requirement has been made with an agreement that Apple would make use of local purchases once it has made strong foot holding in the country.
Last year, the government had carved out a window for foreign companies for setting up shops country wide via single-brand retail route. It was decided that companies which are opting to set up their stores under the single-brand retail format would have to source 30% from the local vendors. The decision was made to give support to local vendors.
However, the government made the decision to provide the waiver to Apple and relax the agreement after country’s commerce and industry minister, Nirmala Sitharaman announced at a press conference.
Times of India quoted an anonymous source that it is fair enough to insist someone for local production for a two-three year period, but bounding someone for five years is a long period. Apple had also mentioned to the government that it has started purchase of chargers from the country which are also being used for exports.
The Apple specific shops and retail outlets is key for tapping the market as this would prevent the iPhones sales, which are sold at lower prices by the competitors.
As of 02:37 PM EDT today, Apple stock is up 1.96% and trades at $78.12. The news would definitely push the stock northwards as investors would get aware of it. Average Price Target for the Apple stock by analysts at Street is of $123.98, with most bullish and bearish estimates of $185 and $102 respectively.