With the Karnataka government saying it welcomes Apple’s move to start ‘initial manufacturing’ from Bengaluru, it is almost certain that the tech major is all set to start production in India.
India is a crucial market for Apple in terms of future growth, especially with the US, Europe and China markets pretty much saturated by now. It would not have been an easy decision for Apple, given that it will have to source about 30 per cent or inputs, locally. How they cross this hurdle will be interesting, especially since the company has sought exemption from this norm. There is a possibility that the government might actually grant a concession given that getting Apple to make in India will be a badge the Modi government can wear proudly on its sleeve.
Actual manufacturing is much easier, given that both Foxconn and Wistron Corp are already in India. In fact, Apple seems to have decided that Wistron Corp will be the first to make the iPhone in India, most probably the iPhone SE if reports are to be believed. The Taiwanese company is known to have manufactured the iPhone SE and the iPhone 5, both of which have similar chassis.
What does the Apple phone being manufactured in India mean for you?
Well, to start with it should make all the devices made in India cheaper. Let’s take the case of the iPhone SE. This 4-inch smartphone has a box price of Rs 39,000 in India, while it is possible to buy the phone for around Rs 30,000 online the US price of the phone is at least 10 per cent less than even this price. With local manufacturing, Apple should be able to offer the best price in India.
What does it do for Apple?
Local manufacturing will help Apple to tap into incentives and tax holidays as well as the opportunity to start local single brand retail. There is also the possibility of tapping into larger deals with the government especially in the education segment in the future.
While there is a tendency to look at Apple as a niche luxury brand, the fact is that the India operations reported sales of $1 billion in 2015, as per a report in livemint.com. As per the report, Apple India reported a profit of Rs 294 crore in the year that ended March 31, 2016 on a revenue of Rs 9,997 crore.
Apple enjoys a significant market share in high-end smartphones and with more affordable phones it has the opportunity to improve its numbers in the mid-segment where Chinese entrants are making a killing these days. Also, don’t be surprised if Apple also kicks off tie-ups with local service providers to lower the price of ownerships with annual contracts like in the US.
It would be wishful thinking, however, if you expect Apple to come out with a very affordable Indian version of the iPhone to capture the market.