Xiaomi applies for single brand retail license in India

Chinese mobile handset manufacturer Xiaomi is likely to soon procure licence to operate its own branded outlets in India, as part of its effort to increase its offline distribution in coming years, company's top executive said.

Company's India Head Manu Jain said Xiaomi had in March-April last year applied to the government for single brand retail licence under the category of cutting edge technology, and expects to get the licence in a few months.

Jain said, "Our application is pending with the government. What we understand is that it has been approved by Department of Industrial Policy and Promotion, but finance ministry and others still have to clear it."

"We are supplying all necessary documents to the government. We are hopeful that we will get it some time soon, not 100% sure of the timeframe, but hope to get it soon. We have told the government that majority of phones being sold in Indian market are being manufactured here, it is meeting the 30 per cent local sourcing norm for the licence," he said.

Jain further said the single-brand store will be part of the company's marketing strategy to increase offline foothold, even as it enjoys close to 30 percent market share online, the channel through which it sells over 90 percent of its mobile phones in the country.

He said that in order to retain its cost effectiveness in offline sales, the company will adopt the Direct to Retail model to cut down on layers of wholesalers.

"We plan to set up offline base. We will start with 4-5 cities in the next few months, and will be in Ahmedabad in next 5-6 months," Jain said.

"Our aim will be to get 25-30 percent share offline by the end of this year," he said.

"Even in offline sell, we will cut down cost by following Direct to Retail model of distribution. We will have one partner in every city and will give directly to them, in order to part benefit to users," he said.

The company sells 2.5 to 3 million units of mobile phones every quarter, 75 percent of which is being made in India, Jain said.

India had in January 2012 relaxed its FDI norm for single branded retails and allowed 100 percent FDI in single-brand retail, with condition that 30 percent of value of goods is sourced from India.