Dive Brief:

• After conflicting reports this summer, India's Prime Minister Narendra Modi has formally cleared the way for Apple to open its first Indian retail store.
• Citing sources familiar with the matter, Bloomberg reports Modi’s cabinet on Wednesday approved a three-year exemption allowing foreign single-brand retailers with "cutting-edge technology" to temporarily bypass a requirement to source 30% of goods in their stores from Indian manufacturers.
• The decision on exemptions will likely extend to Chinese tech companies Xiomi and Leshi Internet Information and Technology, which have also applied for exemptions

Dive Insight:

India, known for its arcane foreign investment rules designed to protect homegrown businesses, is grudgingly cracking open its marketplace to overseas e-commerce and tech companies. The government's move to allow Apple to bypass these rules signifies a larger shift in philosphy to welcome foreign retailers, despite the challenges it may pose for local merchants.

For months, Apple CEO Tim Cook has been edging to enter what is has become the world's fastest growing smartphone market, driven by a young mobile-first generation and emerging middle class. Smartphone sales in India are poised to increase more than 25% this year alone, according to Reuters, making it a critical market for a strategy aimed to dominate the global mobile device business.

Apple products like iPhones and iPads are currently sold in India through third-party retailers, such as Tata Group and Reliance Industries. But a move to construct full-fledged Apple stores could further increase sales and potentially eclipse cheaper, more popular competitors, such as Samsung Electronics and Micromax Informatics.

Earlier this year, the Indian government clarified foreign direct investment rules regarding e-commerce in hopes to protect local brick and mortar retailers. Swedish furniture retailer Ikea previously announced it is scheduled to open its first Indian store next year in the tech-driven city of Hyerabad.