OPPO leads charge for retail FDI nod

New norms:In its latest FDI policy, the Centre tightened rules for firms producing items with cutting-edge technology  

China’s OPPO Electronics Corp. has sought the Centre’s approval to expand its operations in India by opening wholesale and single-brand retail stores.

With this, the Guangdong-based electronics and technology services provider has become the first company to file an application since the NDA Government’s June 20 announcement of reforms to the Foreign Direct Investment (FDI) policy, which included significant changes in local sourcing norms for FDI in single-brand retail.

OPPO Mobiles India Pvt. Ltd. filed its application on June 30 before the Department of Industrial Policy and Promotion (DIPP) – the nodal Central government agency on formulation and implementation of FDI policy as well as on retail trading, official sources said.

The company, however, declined to respond to an e-mail sent by The Hindu in this regard. It is learnt that OPPO intends to establish close to 40,000 stores - company-owned as well as franchise outlets - in India by the year-end.OPPO had officially set foot in the Indian market in January 2014 and unveiled in June the same year its ‘Find 7’ Android-based smartphone in the country.

Mobile phones

Founded in 2004, OPPO entered the mobile phone market in 2008. OPPO said its mobile phones are currently available in more than 20 markets with the brand already registered in 140 countries as of late 2015. Earlier, electronics manufacturers such as Apple, LeEco and Xiaomi too had applied for relaxation of local sourcing norms, the sources said. In the latest version of the FDI policy, the Centre has tightened rules for firms producing items with cutting-edge and state-of-art technology— by granting them only a three-year waiver from the 30 per cent local sourcing norm.

The tightening of norms is to ensure that they manufacture in India rather than rake in huge profits through mere trading. The FDI norms before June 20 had given a permanent blanket exemption from local sourcing norms for such companies producing items with cutting-edge and state-of-art technology.

Perusing an application from Apple prior to the June 20 reforms, a government panel led by Department of Industrial Policy and Promotion Secretary had recommended that the 30 per cent local sourcing norms may be waived for the company. This would enable it to establish single brand retail stores in India since its proposal met the definition of ‘cutting-edge technology.’ Apple, the sources said, had sought the waiver claiming that it produces ‘cutting-edge technology’ items for which it may not be possible to source as much from India. However, the Finance Ministry later rejected the government panel’s decision. After the announcement of the June 20 FDI reforms package, Commerce and Industry Minister Nirmala Sitharaman said that Apple may have to file a fresh application after studying the changes in local sourcing norms. On Xiaomi’s application, the government is learnt to have asked the company for more information.

Becomes the first to file application since significant changes to local sourcing norms were announced