Apple Inc. will start producing some of its technology devices in India. The Wall Street Journal claims that negotiations between the US company and the Indian government have gone well and both sides are very close to an agreement.
The main points of negotiation between both parties are centered on taxes and tariffs. The Indian government would be willing to grant some of the benefits that the American company demands to increase its presence in the country, according to The Wall Street Journal. Among those benefits is a 15-year tax exemption on the import of components and equipment.
The Indian smartphone market is an excellent growth opportunity for Apple
Apple’s entry into India would help the company increase its presence in a powerful emerging market with 1.3 billion people and a very low penetration of smartphones compared to other markets in which the company already operates. Apple’s market share (smartphones) in India is currently less than 5%.
The breakdown of the negotiations would be a blow to Prime Minister Narendra Modi’s plans to turn India into one of the world’s top manufacturing nations. The negotiations, however, are under severe criticism for the granting of tax exemptions to the foreign company. According to Reuters, no company has received the benefits Apple demands from the government. Samsung and Xiaomi, among other manufacturers, already operate in the Asian country.
The Indian smartphone market is a big growth opportunity for Apple. IDC data show a growth of 17.5% during the third quarter of 2016 (compared to the same period of the previous year). In that period more than 30 million smartphones were marketed for the first time in the Asian country.
Chinese manufacturers are some of the main beneficiaries of the Indian market growth. Applying strategies similar to those used in China during the last five years, manufacturers like Xiaomi have obtained a 7.4% market share. Online sales have been one of their main weapons.
“India is a growing market and offers Apple the opportunity to manufacture its mobile phones at a very low price.”
The Lenovo group (made up of Lenovo and Motorola products) is one of the largest manufacturers in the country with a 9.6% market share, according to data published by IDC in relation to the third quarter of 2016. However, no one exceeds Samsung, which absorbs 23% of the market share.
Both Xiaomi and Lenovo and Samsung recorded positive growth rates during the third quarter of 2016, a symptom of the growth that the Indian market is experiencing. With the opening of centers in India, Apple seeks to take advantage of that growth that the market experiences – in addition to producing mobile phones at a low cost. However, the high price of its products – in the face of much cheaper Xiaomi, Samsung or Lenovo solutions – can make it difficult to grow in the short term in the country.
Why iphone in India
- The Indian smartphone market presents a unique opportunity for growth.
- Indian labor is cheap and makes it easy to produce your devices.
- The agreement between Apple and the Indian government is about to be closed.