Apple Stores May Come To India, But Challenges Remain

by Poonam Mondal    Jun 21, 2016

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With the huge growth of smartphone business in India, Apple finally got a chance to roll its first store in India and, under new foreign investment rules for retailers, Apple might eventually start manufacturing in the country.

The government relaxed FDI rules and eased the condition that stipulates companies to source at least 30 per cent of their components or merchandise for being eligible to set up company-run retail stores in India

Earlier the California-based tech giant had planned and tried to open branded stores in India. But the company faces the roadblock of abiding by the 30 per cent local sourcing norm. Even Tim Cook’s recent India visit went in vain, with the finance ministry insisting that the maker of iPhones and iPads abide by the 30 per cent local sourcing norm if it wants to open branded stores in India.

Read Also: Tim Cook’s India Visit May Bring Cheers To Apple Lovers

“There is nothing to show that Apple’s technology is cutting edge. The Department of Industrial Policy and Promotion (DIPP) has been asked to come out with a clear-cut guideline defining ‘cutting edge’ and ’state-of-the-art’ technology for which such a waiver can be given. There are other companies also in the queue. It could create controversy if we waived the norms for only one without stated guidelines,” the official cited above said.

“There is no evidence before us to reveal that the products are cutting-edge or high-technology. Apple can open single-brand retail stores but has to meet the sourcing requirements,” the official added.

Apple, which currently sells its iPhones, iMacs and iPads through resellers, will set up its own shops in India, ending months of uncertainty for the California-based company that had first applied for store licenses in January.

Why Apple plans to start its India venture? 

India has always been a tempting destination among the tech leaders to explore, as there is a huge opportunity as far market is concerned. India is the world’s fastest growing smartphone market, with sales expected to rise over 25 per cent this year. Therefore, it was crucial for Apple to set in India and mark its place in the fastest growing market as growth in China and the U.S. has stalled.

Read Also: Is India Apple’s Next Growth Market After China?

The new directive paves the way for Apple to resubmit its application and rapidly start retail stores in India. It can also seek an additional exemption for five years if it convinces the government its products meet the “cutting edge” criteria.

Tim Cook during his recent visit in India, met Prime Minister Narendra Modi and also discussed the company’s plan to set up manufacturing facilities in India, which would create jobs and boost PM Modi’s ‘Make in India’ initiative. Cook also discussed with India’s two largest carriers Bharti Airtel and Vodafone to work more closely to sell iPhones.

With the new rule, it seems that Tim Cook’s plan to take over Indian Smartphone market will soon be fruitful. 

Scenario of existing Apple consumers

The existing customer has always faced problems in after sales service of their devices after buying them from different online portals as many Apple resellers in the country would close their doors on them. But now onwards it is expected that the customers will be able to interact directly with the company and take advantage of their services directly. This also means that consumers can expect to get faster and better after sales service with their Apple products.

Experts believes that Apple was aiming for controlled marketing with the new stores. “The new stores, mostly in metros, will be more about controlling end-to-end experiences for consumers which means that it will help people more from an upgrade, services point of view rather than target getting new users. Simply put, it will help in building brand loyal customers,” Tarun Pathak, ‎senior telecom analyst at Counterpoint Technology Market Research, said.

He also added that initially the interest in the store will be low but later it will work as a great vantage point for the company.

Read Also: Will Tim Cook’s India Visit Prove Fruitful For Apple

Vishal Tripathi, research director at Gartner India, also said that the stores will act as alternate marketing strategy for Apple in India to expand its user base in India. He also said that the new stores might improve the quality of after sales service in the country.

India has been lobbying for Apple and its partner Foxconn to begin manufacturing in the country as part of Prime Minister Narendra Modi’s agenda to bring in foreign manufacturers to create millions of jobs. This will be big push for not only Tim Cook’s business but also in the fulfillment of Modi’s agenda.