https://sputniknews.in/20231213/what-makes-india-a-suitable-market-for-apple-5813737.html
What Makes India Suitable Market for Apple?
What Makes India Suitable Market for Apple?
Sputnik India
Apple has said it plans to expand iPhone manufacturing in India. Experts told Sputnik India that the country has favorable conditions to increase the company’s... 13.12.2023, Sputnik India
2023-12-13T17:13+0530
2023-12-13T17:13+0530
2023-12-13T19:50+0530
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android technics
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Apple is planning to expand iPhone manufacturing in India over the next two-to-three years in order to assembly one out of four iPhones there every year.This is not the first time that the company has spelled out its plans to expand its footprint in the country.Last month, iPhone maker Foxconn announced that it will invest $1.6 billion in India during an exchange filing in Taiwan. Earlier in April, the company opened two new retail stores in two days.Sputnik India reached out to experts to understand the reasons behind Apple’s plans for the Indian market, why the company wants to shift production from China and whether this will hurt local mobile phone manufacturers.Apple's Market Share in IndiaAccording to market research firm Counterpoint Research, Apple holds a 59 percent market share in India in the ultra-premium smartphone segment for the first quarter of 2023.Sharing the reasons behind Apple’s expansive plan in India, Dr. (Prof) Nishakant Ojha, an advisor for cyber and aerospace security and counter terrorism in West Asia and the Middle East, told Sputnik India that the company has showcased its strong market presence in India.Meanwhile, Research Director at Counterpoint Research Tarun Pathak told Sputnik India that as India is important to players such as Apple as it has a high-growth smartphone market.“India is home to over 850 million mobile phone users and [has the] potential to have more than a billion smartphone users in the next five years. Most of these users are upgrading to their second or third smartphones right now and being 'mobile first', consumers are spending and upgrading to better and more expensive smartphones,” Pathak said, adding that this grants a significant opportunity for Apple in terms of the huge potential market outside China and the USA in the coming years.He further said that this is where the premium market has doubled in just two years and Apple has been the big beneficiary with its growth in volume market share tripling from two percent growth before the pandemic to more than six percent at the end of 2023.Therefore, he thinks that Apple has picked an optimum time to expand its retail footprint in such a potential market where it can not only sell millions of iPhones every year but also manufacture them here and cross-sell other Apple devices.Talking about the reasons why Apple wants to shift production from China, Ojha said that the US multinational has realized that its heavy reliance on China during the COVID lockdowns severely impacted production and exports.Navigating Apple's Expansion in India Amidst Global CompetitionIndia has become as substantial market as seven million iPhones were sold in 2022 alone. Apart from this, the country has also shown remarkable growth as a manufacturing and exports hub, recording a noteworthy $10 billion in electronics exports for FY23.However, Ojha cited several challenges for Apple in India as he said that it still heavily relies on China for importing key components, and out of the 120 suppliers to Apple, only 12 currently manufacture in India.“Competition from countries like Vietnam, offering lower duties to attract investments, poses a threat. Additionally, the current value addition in India is limited to about 14-20 percent, and delays in PLI incentive payouts may cause some discomfort,” he stated.He further said that Apple is placing a significant bet on India in its China+1 strategy but uncertainties persist regarding whether manufacturing iPhones in India would lead to cost reductions. China+1 is a supply chain strategy that encourages companies to diversify their supply chain and manufacturing activities away from China to mitigate risk.“Apple is known for maintaining high-quality standards and pricing, and it remains uncertain if the manufacturing shift would significantly impact iPhone costs in India, considering the strong demand and consumer enthusiasm for Apple products,” Ojha opined.Sharing his views about the same issue, Pathak said that the “premiumization of market” has begun in the world’s second-largest smartphone market and Apple, as usual, has got the timing right on “peaking at the right time” to catalyze this trend in its favour through its broad iPhone portfolio and financing offersMeanwhile, Faisal Kawoosa, chief analyst and founder of Techarc, a Gurugram-based tech market advisory firm, told Sputnik India that Apple has been looking for a China+ strategy for some time now and it is great that it coincides with the time when India is also creating global brands to set up large scale manufacturing.Sharing the views about challenges which Indian mobile phone manufacturers will face due to increasing footprints of Apple in the country, Ojha opined that there seems to be no threat to the indigenous mobile manufacturers.“It's noteworthy that Apple occupies a distinct market segment, with no overlap into other segments. However, the primary market focus for Apple lies in the higher-end segment, while the lower segment is dominated by other players, including the influential presence of BBK Electronics and its various brands prevailing in India,” he stated.Echoing the views of Ojha, Kawoosa stated that he doesn’t thinks that these kind of developments will overlap as every brand is invited to India to manufacture and establish a base.“I don't see it will impact entry of other brands into the country as every brand in the mobile industry right now is active in India, is working on increasing its commitment and stay in India,” he said.
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What Makes India Suitable Market for Apple?
17:13 13.12.2023 (Updated: 19:50 13.12.2023) Apple has said it plans to expand iPhone manufacturing in India. Experts told Sputnik India that the country has favorable conditions to increase the company’s footprint.
Apple is planning to expand iPhone manufacturing in India over the next two-to-three years in order to assembly one out of four iPhones there every year.
This is not the first time that the company has spelled out its plans to expand its footprint in the country.
Last month, iPhone maker Foxconn announced that it will invest $1.6 billion in India during an exchange filing in Taiwan. Earlier in April, the company opened two new retail stores in two days.
Sputnik India reached out to experts to understand the reasons behind Apple’s plans for the Indian market, why the company wants to shift production from China and whether this will hurt local mobile phone manufacturers.
Apple's Market Share in India
According to market research firm Counterpoint Research, Apple holds a 59 percent market share in India in the ultra-premium smartphone segment for the first quarter of 2023.
Sharing the reasons behind Apple’s expansive plan in India, Dr. (Prof) Nishakant Ojha, an advisor for cyber and aerospace security and counter terrorism in West Asia and the Middle East, told Sputnik India that the company has showcased its strong market presence in India.
“The data of Counterpoint Research underscores Apple's dominant position in India's premium smartphone market, a position it has carefully nurtured over time. Apple has ambitious plans to boost production in India, aiming to exceed $40 billion [in assets] in the next 4-5 years, having already surpassed $7 billion in the last fiscal year,” Ojha stated.
Meanwhile, Research Director at Counterpoint Research Tarun Pathak told Sputnik India that as India is important to players such as Apple as it has a high-growth smartphone market.
“India is home to over 850 million mobile phone users and [has the] potential to have more than a billion smartphone users in the next five years. Most of these users are upgrading to their second or third smartphones right now and being 'mobile first', consumers are spending and upgrading to better and more expensive smartphones,” Pathak said, adding that this grants a significant opportunity for Apple in terms of the huge potential market outside China and the USA in the coming years.
He further said that this is where the premium market has doubled in just two years and Apple has been the big beneficiary with its growth in volume market share tripling from two percent growth before the pandemic to more than six percent at the end of 2023.
Therefore, he thinks that Apple has picked an optimum time to expand its retail footprint in such a potential market where it can not only sell millions of iPhones every year but also manufacture them here and cross-sell other Apple devices.
Talking about the reasons why Apple wants to shift production from China, Ojha said that the US multinational has realized that its heavy reliance on China during the COVID lockdowns severely impacted production and exports.
“Geopolitical tensions further highlighted the need for Apple to enhance the resilience of its supply chains. Therefore, India emerged as a strong performer, maintaining stable production despite the challenges posed by the pandemic. Along with this, the favourable conditions, coupled with the Production-Linked Incentive (PLI) scheme, made India an attractive choice,” he said.
Navigating Apple's Expansion in India Amidst Global Competition
India has become as substantial market as seven million iPhones were sold in 2022 alone. Apart from this, the country has also shown remarkable growth as a manufacturing and exports hub, recording a noteworthy $10 billion in electronics exports for FY23.
However, Ojha cited several challenges for Apple in India as he said that it still heavily relies on China for importing key components, and out of the 120 suppliers to Apple, only 12 currently manufacture in India.
“Competition from countries like Vietnam, offering lower duties to attract investments, poses a threat. Additionally, the current value addition in India is limited to about 14-20 percent, and delays in PLI incentive payouts may cause some discomfort,” he stated.
He further said that Apple is placing a significant bet on India in its China+1 strategy but uncertainties persist regarding whether manufacturing iPhones in India would lead to cost reductions. China+1 is a supply chain strategy that encourages companies to diversify their supply chain and manufacturing activities away from China to mitigate risk.
“Apple is known for maintaining high-quality standards and pricing, and it remains uncertain if the manufacturing shift would significantly impact iPhone costs in India, considering the strong demand and consumer enthusiasm for Apple products,” Ojha opined.
Sharing his views about the same issue, Pathak said that the “premiumization of market” has begun in the world’s second-largest smartphone market and Apple, as usual, has got the timing right on “peaking at the right time” to catalyze this trend in its favour through its broad iPhone portfolio and financing offers
“As we analyze Apple's strategic approach, we observe the implementation of a comprehensive three-dimensional (3D) strategy, centered around key pillars of domestic manufacturing, distribution, and driving premiumization. This multi-faceted approach reflects Apple's commitment to staying ahead in the market and catering to the evolving needs of consumers,” he stated.
Meanwhile, Faisal Kawoosa, chief analyst and founder of Techarc, a Gurugram-based tech market advisory firm, told Sputnik India that Apple has been looking for a China+ strategy for some time now and it is great that it coincides with the time when India is also creating global brands to set up large scale manufacturing.
Sharing the views about challenges which Indian mobile phone manufacturers will face due to increasing footprints of Apple in the country, Ojha opined that there seems to be no threat to the indigenous mobile manufacturers.
“It's noteworthy that Apple occupies a distinct market segment, with no overlap into other segments. However, the primary market focus for Apple lies in the higher-end segment, while the lower segment is dominated by other players, including the influential presence of BBK Electronics and its various brands prevailing in India,” he stated.
Echoing the views of Ojha, Kawoosa stated that he doesn’t thinks that these kind of developments will overlap as every brand is invited to India to manufacture and establish a base.
“I don't see it will impact entry of other brands into the country as every brand in the mobile industry right now is active in India, is working on increasing its commitment and stay in India,” he said.
