Report: Indian government rules Apple must sell 30% locally sourced goods to open retail stores

In India, it’s required that any company wanting to set up a retail location must sell at least 30 percent locally sourced goods, but reports claimed that because of Apple’s “cutting-edge technology,” it would be able to circumvent this requirement. According to a report from Reuters today, however, that is not the case.

According to the report, which cites a “senior government official,” Apple must sell at least 30 percent locally sourced goods in order to open retail locations in India. While a change in legislation took place last year exempting some tech manufacturers from this rule, Apple apparently does not meet those requirements.

Apple reportedly applied for a waiver, but didn’t “provide any material on record to justify it.” In essence, the government official says that Apple didn’t justify that it would bring “state of the art” or “cutting-edge technology” to India with its retail locations.

“They did ask for a waiver but didn’t provide any material on record to justify it. The decision was taken only after a thorough examination of their application,” the source said. The waiver is available only for investment in “state of the art” or “cutting-edge technology”, he added.

News of this setback comes a week after Tim Cook and other Apple executives spent four days traveling throughout the country. Cook met with Indian Prime Minister Narendra Modi and executives from various carriers, while Lisa Jackson visited The Barefoot College where iPads and Macs are used to educate.

There are currently a handful of franchise Apple retail locations in India, as well as several small locations in existing electronic retailer stores. Apple reportedly plans to open at least three stores in India by the end of 2017, but it’s possible that may get pushed back with today’s revelation.

The good news, however, is that Foxconn is reportedly set to open a $10 billion iPhone manufacturing plant in India. This will help Apple reach that 30 percent number, although it will take 18 months from the time the deal is finalized to make the plant operational. Apple will also open a development center in Hyderabad, India and an iOS App Design and Development Accelerator in Bengaluru.