View photosMoreA pedestrian walks past an Apple iPhone 6 advertisement at an electronics store in Mumbai, India, July 24, 2015.
The finance ministry's foreign investment promotion board FIPB , which clears foreign direct investment applications, has asked the iPhone maker to sell at least 30 percent locally sourced goods if it wished to open shops in India.
Apple hopes to expand its retail presence in India, one of the world's fastest-growing smartphone markets, at a time when sales in the United States and China have slowed.
A panel set up by Sitharaman's ministry had favored waiving the sourcing requirement for the U.S.-based phone-maker.
"We took a line that we wouldn't mind waiving off the local sourcing norm for Apple's high-end products," said Sitharaman.
The FIPB decision is a setback for Apple, whose chief executive Tim Cook met Indian Prime Minister Narendra Modi about a week ago.