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Was Tim Cook's Visit To India A Failure? Bloomberg Says Apple Was Dealt A 'Fatal Blow'

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Was Tim Cook's Visit To India A Failure? Bloomberg Says Apple Was Dealt A 'Fatal Blow'

Apple Inc. (NASDAQ: AAPL)'s CEO Tim Cook recently visited India to meet with business leaders and senior government officials, including the country's Prime Minister Narendra Modi.

Cook's visit to the country comes at a time when the company has been actively pressing the government to grant it permission to operate retail stores in the country. Apple's strategy of maintaining complete control of its supply chain is at odds with India's retail policy, which would require Apple to procure at least 30 percent of its components locally.

Related Link: What Challenges Does Tim Cook Face In India?

According to a report by Bloomberg, India's finance minister Arun Jaitley reaffirmed the country's policy 30 percent policy. As such, the government may have dealt a "fatal blow" to the company's ambitions to set up shop in the country.

The finance minister's decision could technically be overturned, but it would require the intervention of the prime minister who could provide a waiver to "cutting-edge" technology companies.

Commentary

However, Bloomberg, citing "people familiar with the matter," noted that the ruling government decided Apple cannot qualify for the exemption.

"The government's decision will have a pretty profound effect on Apple," Neil Shah, a research director at Counterpoint Research told Bloomberg.

Apple had hoped consumers in India would flock to its stores where they can't buy devices from other brands.

"Apple has to continue retailing in India through a variety of avenues like premium resellers, online retailers and multi-brand stores," Shah also said. "The multi-brand stores, for example, can steer customers away from costly iPhones to less expensive but high-margin brands."

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