Cupertino based technology major Apple is looking towards India as a major market even as global sales of iPhones have gone down. This was despite the Narendra Modi government rejecting Apple Inc’s demand for concessions in customs duties for its suppliers for manufacturing in the country.
Apple CEO Tim Cook said on early Wednesday, “We’re very optimistic about our future in this remarkable country with its very large, young, and tech-savvy population, fast-growing economy, and improving 4G network infrastructure.”
Cook was speaking at the opening address in which he said that Apple’s revenue in India increased by double digits during the quarter ending April 1 which was a record. Chief financial officer Luca Maestri said that the strong double digit growth was over 20 per cent in many markets of which India was one.
Although globally, sales of iPhones went down from 51.19 million to 50.76 million, sales in India alone were of 2.5 million iPhones between October 2015 to September 2016.
While the main point of discussion was about the high growth rate of iPhones sales in India and availability of 4G network access, Apple opted to be reticent and uncommunicative about its plans in India or on the regulatory barriers in the country.
To the query by Simona K Jankowski, of Goldman Sachs of whether Apple expected to sell 10 to 20 million iPhone in India next year bearing in mind the growth rate and accessibility of 4G, Cook replied that “We’ve been investing quite a bit… it is the third-largest smartphone market in the world today behind China and the US… So, we believe, particularly now that the 4G infrastructure is going in the country and is continuing to be expanded, there’s a huge opportunity for Apple there. So that and the demographics of the country is why we’re putting so much energy there.”
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To another question, Cook added that the penetration of the company in India was not enough and that Apple is going to bring all the things they bought to bear in all the other markets that they have done well in which included stores to their ecosystem and their channels.
Store plan on hold
Apple had proposed as early as 2016 to set up fully owned stores in India, the plan has been put on hold. This is because India’s single brand retail direct investment policy (FDI) policy terms state that there should be 30 per cent local sourcing. This has put Apple’s plan of totally apple owned retail store in India on hold.
Apple was clear right from the outset that compliance with the 30 per cent sourcing clause not feasible for the company. Apple was to be considered by the Indian government as a niche cutting edge company to save it from the compulsory local sourcing. However, there has been a delay of almost a year in defining cutting edge company.
Even though the government eventually decided that a company which manufactured mostly in India, would be exempt from sourcing norms, a source from Apple said that the mathematics was still not working out for Apple.
Among Apple’s other plans are beginning and starting online stores thus making buying iPhones online possible option for Indian consumers. There are also two more factors which Apple may be dealing with in the future and working on with the Indian government. One is the sale of Apple certified pre-owned phones and the venturing into phased manufacturing which the Ministry of electronics and technology has recently mooted.
Although the sale of pre-owned phones was rejected by the Indian government, Apple may be involved in discussions with the Indian government on the latter.