Apple plans to set up own stores in India
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Hoping to replicate its success in the Chinese market, Apple is looking at setting up its own wholly owned stores in India. Currently, the company sells its products through distributors such as Redington and Ingram Micro.
India’s smartphone market has been witnessing significant growth. Earlier in 2016, India surpassed the United States as the second-largest smartphone market with 220 million smartphone users. While smartphone users still account for about 22% of the roughly 980 million mobile users in India, there is tremendous opportunity for growth over the next few years.
Little wonder that the company is looking at India as a lucrative market for setting up production. Apple has also announced plans to make iPhones for the Indian market in Peenya, Bengaluru in association with Wistron, a Taiwanese OEM manufacturer for Apple. Production will start by April 2017.
With local manufacturing facilities, Apple would be able to price its phones more competitively in India. The steep price for the phones is a deterrant for the price conscious Indian consumer. The phones attract 12.5% additional duty on imports.
According to media reports, Foxconn, the biggest contract manufacturer for Apple has also been roped in to set up a manufacturing unit in India. Foxconn is adopting a model of setting up smartphone assembly lines in multiple cities across India, with a second iPhone facility coming up in Gurgaon.
An announcement is likely to be made during the Vibrant Gujarat Global Summit 2017 to be held on January 10 at Gandhinagar. Apple has announced that it would open its brand-owned stores, besides a 4,000-people facility in Hyderabad for its mapping unit.
Reports suggest that the iPhone maker has requested for concessions such as relaxation in labelling rules, so it doesn’t have to print product info on its devices, and tax incentives in return for setting up a manufacturing unit in the country. The Department of Industrial Policy and Promotion (DIPP) has forwarded Apple’s request to the Department of Revenue and Ministry of Electronics and Information Technology (MeitY) in November. Government officials are yet deliberating on the company’s request.
“Apple has also announced plans to make iPhones for the Indian market in Peenya, Bengaluru in association with Wistron, a Taiwanese OEM manufacturer for Apple.”
In May last year, Apple’s CEO Tim Cook visited India and met Prime Minister Narendra Modi as well as key industry leaders like Sunil Bharti Mittal and veteran banker Chanda Kocchar. Apple also announced plans to set up a design and development accelerator to support Indian developers creating innovative applications for iOS and opened a new office in Hyderabad to accelerate maps development.
During his May visit, Cook had discussed issues including manufacturing and setting up retail stores in the country with Modi.
An inter-ministerial meeting, scheduled for next month, will discuss and deliberate certain incentives sought by tech-giant Apple Inc to set up a manufacturing unit in the country to be able to ‘make in India’. The meeting will be attended by senior officials from the ministries of finance, commerce, revenue, environment and forest, electronics and information technology, among others.
The government, however, believes Apple shouldn’t seek additional support to set up manufacturing plants.
“Several companies in India are manufacturing mobile phones in India. Nobody is asking for additional incentives. Currently, the government provides sufficient support to boost electronic manufacturing,” PTI quoted government sources as saying.
The tech giant proposed to bring used smartphones and assemble them locally. This was rejected as it did not constitute the Make in India model envisioned by the government. Nevertheless, it got local sourcing norms relaxed from the Department of Industrial Policy & Promotion to open its stores in the country.
In a report published recently, government sources have said that it may agree to some of Apple’s demands for setting up a manufacturing unit in India if the maker of iPhones promises a huge investment and commits to generating hundreds of thousands of jobs.
Questions & Answers
Q.Why is Apple planning to open its own retail stores in India?
Why is Apple planning to open its own retail stores in India?
Apple currently sells its products through distributors and hopes to replicate its success in the Chinese market. Establishing its own stores is part of its strategy for the growing Indian smartphone market.
Q.What is preventing Apple from pricing its phones more competitively in India?
What is preventing Apple from pricing its phones more competitively in India?
The steep price is a deterrent for price-conscious Indian consumers. Phones attract a 12.5% additional duty on imports, making them more expensive in the market.
Q.What concessions has Apple requested from the Indian government?
What concessions has Apple requested from the Indian government?
Apple has requested relaxation in labelling rules, so it doesn’t have to print product info on its devices. It has also sought tax incentives in return for setting up a manufacturing unit in the country.
Q.Which company will be manufacturing iPhones for the Indian market?
Which company will be manufacturing iPhones for the Indian market?
Wistron, a Taiwanese OEM manufacturer for Apple, will produce iPhones for the Indian market in Peenya, Bengaluru. Production is scheduled to begin by April 2017.
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