Finally, some good news for Apple fanboys, Apple Retail Stores are coming to India! Setting up retail stores in India has been a foremost propaganda for Apple Inc. (NASDAQ:AAPL) in order to better understand the Indian smartphone market and expand its reach in Asia region. The iPhone maker’s ambitious dream of setting up Apple retail stores in India had hit a roadblock last month as Apple didn’t agree to follow the 30% Government norms. But fortunately, today the iPhone giant may take a sigh of relief as the Indian Government has decided to waive off the 30% sourcing norm for 3 years that can be extended on grounds of ‘state-of-the-art technology’. Earlier Apple used to sell its iPhones in India by premium resellers, i.e. Redington, Ingram Micro, which operated under Franchise model.
Indian Government has already banned the sale of refurbished iPhone in India recently over the accumulating e-waste in the country. Refurbished iPhones, especially iPhone 5s recorded the chunk of the profit for Apple in India in fiscal Q1 2016. Relaxation of sourcing norms may be considered as a silver lining for the Cupertino-based company.
Apple has also planned to open huge 10,000 Sq. ft. stores in Bangalore, New Delhi and Mumbai by 2017. Apart from that, during Tim Cook’s India visit, the company has decided to invest a whopping $25 million sum in a new facility in Hyderabad that will focus on Apple maps and in turn creates 4000 jobs as well. The company also emphasised on polishing new talents by setting up a Design and Development accelerator in Bangalore by next year that will aid the budding software developers.
The foremost problem for the iPhone behemoth after the refurbished iPhone sales ban in the country is catering the needs of the budget-conscious Indian smartphone users who prefer features instead of falling for a brand name. This could easily be understood from the fact that Average Selling Price (ASP) of a smartphone in India in 2015 was just Rs 10,700 ($160).
Rumour mills are also churning out news about the company’s manufacturing plant in partnership with Foxconn and Pegatron in India. Apple has to set up a factory in India as soon as possible to sell its indigenous phones in the country. Newly imported iPhones are bundled with taxes that lead to surge pricing in India as the Indian currency is quite weaker than US dollars.
India has emerged as the key market for Apple, especially after the recent tussle with the Chinese government. Off late Apple is having a difficult time in China; the walled market has banned iPhone 6 and iPhone 6 plus sales in Beijing following a patent dispute. Apple, however, doesn’t want the Chinese market to slip out of its hands and thus the company has invested an enormous $1 billion in a Beijing-based private taxi company, DiDi Chuxing. In such a scenario the company is anxiously trying to expand its reach to potential markets like India.
Apple Retail Stores in India: A Challenging Opportunity
The prime focus for major smartphone manufacturers is Tier-2 and Tier-3 cities in India. According to the latest report by IDC, 25 major Tier2 and Tier3 cities account for 21.3% of the total smartphone market in India. A number of operators are expanding their 4G network and focusing majorly on Tier-2 and Tier-3 cities of India and in turn, the adoption rate of smartphones is continually rising in these cities. The noticeable point in the report is that two-third of the smartphones sold in these cities lies in sub $100 price category. Apple has to find a way to penetrate these markets. However, it has become a daunting task for the company considering the ban on refurbished iPhones.
On the other hand, being the second largest smartphone market in the world after China, India still possesses a huge market potential for smartphones OEMs. As a mere 17% of the total, (1.25 billion) population of India has a smartphone. As the iPhone comes in premium smartphone category thus, the company has a tiny 2% of the total smartphone market share in India. The company has to revamp its strategy if it wants to capture Indian smartphone market which is dominated by Samsung.
Considering Apple’s own presence in India, consumers may get to enjoy more offers and schemes that may make iPhone easy on their pocket. Schemes like interest-free EMIs, buy-back, and a new iPhone every year have already been producing encouraging results for Apple. The presence of Apple may not only strengthen its post-sales support and boost consumers confidence but will allow Apple to market and sell its other services in India.