Why Apple Is Betting Huge on India

NEW DELHI — Apple Inc. opened its first flagship retailer in India in a much-anticipated launch Tuesday that highlights the corporate’s rising aspirations to broaden within the nation it additionally hopes to turn into a potential manufacturing hub.

The corporate’s CEO Tim Cook posed for photographs with just a few of the 100 or so Apple followers who had lined up exterior the sprawling 20,000-square-foot retailer in India’s monetary capital, Mumbai, its design impressed by the enduring black-and-yellow cabs distinctive to town. A second retailer will open Thursday within the nationwide capital, New Delhi.

“India has such a phenomenal tradition and an unimaginable power, and we’re excited to construct on our long-standing historical past,” Cook dinner stated in a press release earlier.

The tech large has been working in India for greater than 25 years, promoting its merchandise by approved retailers and the web site it launched just a few years in the past. However regulatory hurdles and the pandemic delayed its plans to open a flagship retailer.

The brand new shops are a transparent sign of the corporate’s dedication to put money into India, the second-largest smartphone market on this planet the place iPhone gross sales have been ticking up steadily, stated Jayanth Kolla, analyst at Convergence Catalyst, a tech consultancy. The shops present “how a lot India issues to the current and the way forward for the corporate,” he added.

For the Cupertino, California-based firm, India’s sheer measurement makes the market particularly encouraging.

About 600 million of India’s 1.4 billion individuals have smartphones, “which implies the market continues to be under-penetrated and the expansion prospect is large,” stated Neil Shah, vp of analysis at know-how market analysis agency Counterpoint Analysis.

Between 2020 and 2022, the Silicon Valley firm has gained some floor within the smartphone market within the nation, going from nearly 2% to capturing 6%, in keeping with Counterpoint information.

Nonetheless, the iPhone’s hefty price ticket places it out of attain for almost all of Indians.

As an alternative, iPhone gross sales within the nation have thrived among the many sliver of upper-middle-class and wealthy Indians with disposable incomes, a phase of consumers that Shah says is rising. Based on Counterpoint information, Apple has captured 65% of the “premium” smartphone market, the place costs vary up from 30,000 rupees ($360).

In September, Apple introduced it could begin making its iPhone 14 in India. The information was hailed as a win for Prime Minister Narendra Modi’s authorities, which has pushed for ramping up native manufacturing ever since he got here to energy in 2014.

Apple first started manufacturing from India in 2017 with its iPhone SE and has since continued to assemble various iPhone fashions from the nation.

Individuals pose exterior the brand new Apple retail retailer throughout a media preview on the eve of its opening in Mumbai on April 17, 2023.

Punit Paranjpe—AFP by way of Getty Photographs

Most of Apple’s smartphones and tablets are assembled by contractors with factories in China, however the firm began doubtlessly transferring some manufacturing to Southeast Asia or different locations after repeated shutdowns to fight COVID-19 disrupted its global flow of products.

“Huge corporations received a jolt, they realized they wanted a backup technique exterior of China — they couldn’t danger one other lockdown or any geopolitical rift affecting their enterprise,” stated Kolla.

Presently, India makes near 13 million iPhones yearly, up from lower than 5 million three years in the past, in keeping with Counterpoint Analysis. That is about 6% of iPhones made globally — and solely a small slice compared to China, which nonetheless produces round 90% of them.

Final week, India’s Commerce Minister Piyush Goyal stated the federal government was in common contact with Apple to help their enterprise right here and that the corporate had plans to have 25% of their world manufacturing come out of India within the subsequent 5 years.

The problem for Apple, in keeping with Shah of Counterpoint, is that the uncooked supplies are nonetheless coming from exterior India so the tech firm might want to both discover a native provider or deliver their suppliers, primarily based in international locations like China, Japan and Taiwan, nearer to drive up manufacturing.

Nonetheless, he’s optimistic this goal might be met, particularly with labor prices being decrease in India and the federal government wooing corporations with enticing subsidies to spice up native manufacturing.

“For Apple, all the pieces is about timing. They don’t enter a market with full circulate till they really feel assured about their prospects. They will see the chance right here at this time — it’s a win-win scenario,” Shah stated.

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