Apple takes bigger bite out of India with new retail stores, expanded iPhone production

[NEW DELHI] There is “Apple-mania” in India this week, with the US tech giant’s chief executive officer (CEO) Tim Cook gracing the opening of the company’s first two retail stores there – one in Mumbai on Tuesday (Apr 18), and the other in the capital New Delhi on Thursday.

Making his first trip to India in seven years, Cook has already met some of the country’s most high-profile business executives, including Reliance Industries chairman Mukesh Ambani and Tata Sons chairman N Chandrasekaran. On Wednesday, he met Prime Minister Narendra Modi in New Delhi and stressed Apple’s commitment to growth and investment across India.

As Apple celebrates 25 years in India, it is eyeing the world’s second-largest smartphone market and the country’s fast-growing middle class to boost its growth. The company is also hopeful that India can be a home base to produce millions of Apple devices, including the popular iPhone.

Here’s what you need to know about Apple’s big push in India.

Why is Apple betting big on India?

The short answer, according to some observers, is the China Plus One strategy. India has emerged as a viable alternative for Apple as Cook seeks to move some production away from China. India is an obvious choice, with similarities between the two countries in terms of labour and population.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Cook said during an investor call in February that he is bullish on India and will leverage the company’s experience in China to grow its operations in India. Based on some Indian media reports, Apple’s sales in the country amounted to around US$4 billion in 2022. Earlier this week, Bloomberg reported that Apple had nearly US$6 billion in sales in India in the year ended March 2023.

What does this mean for India’s smartphone market?

Some estimates suggest that Apple shipped US$7.5 billion worth of iPhones and iPads in the 12 months ended March 2023. Apple currently has a 3 per cent market share in India, and analysts expect this to reach 6 per cent in the 2023/2024 financial year, with over 8 million iPhones sold.

As things stand, Apple still lags behind Samsung in terms of market share by value in the country. However, Apple is the leader when it comes to the premium smartphones segment, defined as phones that are priced above 30,000 rupees (S$487), and the ultra-premium segment (above 45,000 rupees).

What sort of boost does it give to Modi’s Make in India initiative?

Apple’s move to expand production in India sends a strong signal to other multinationals that India is fast-emerging as the factory of the world.

While India is still lacking in terms of infrastructure and resources, the government is trying to close the gap. It recently launched production-linked incentive schemes, which incentivises domestic production in strategic growth sectors where India has a comparative advantage.

“The wheels are slowly and steadily turning for the Make in India initiative,” said Prabhu Ram, the head of CyberMedia Research, an industry intelligence group. “Over the next few years, India will aim to host the entire end-to-end electronics value chain within its borders. The strong bets being taken by players – such as Tata Electronics, under its new CEO Randhir Thakur – is a leading indicator.”

What about India’s iPhone exports?

Apple’s iPhone exports from India surged almost four times year on year to cross US$5 billion in FY2023, based on a recent report in The Economic Times. Apple accounted for more than 40 per cent of all smartphones exported from India from April 2022 to January 2023, data from the India Cellular and Electronics Association showed.

As it increases production in India, Apple has committed itself, over the next five years, to contributing 60 per cent of exports under the production-linked incentive scheme for mobile devices. The iPhone export share in the overall export of smartphones stood at 23 per cent in FY2022.

What can consumers look forward to?

Currently, Apple assembles and sells iPhones in India via three global contract manufacturers – Foxconn, Pegatron and Wistron. Making iPhones in India and selling them directly to the local market will help Apple price the phones more competitively, as it will not have to pay import duties.

The two Apple retail stores in India will introduce the brand and its array of products to a new audience, especially those who have not visited an Apple flagship store overseas before, said Ram. He does not see Apple’s existing third-party stores in India to be significantly impacted, as there will be sufficient room to grow in a significantly large market.