What was long known but has now been put into action is that Apple has started assembling iPhone in India. The production is taking place in Bengaluru (Bangalore) city, and they are currently assembling the initial batches of iPhone SE. iPhone SE is one of the most demanded gadgets and high in popularity. The domestic customers will have the first lot available by the end of this month.
Wall Street Journal was the first to report about the first batch of iPhone assembling in India. They also mentioned that the work is put into action at the Taiwanese contract manufacturer Wistron’s plant. This will certainly push the Apple’s demand in the Indian market, that too when smartphone sales are going slow.
Apple wishes to bring their component manufacturers so that they can manufacture parts in India and then export the finished products. Right now, they are trying to get tax concessions to import the key components. However, there are chances that the Indian government won’t allow all the demands by the US Company.
The Indian Law requires Apple to source 30% or more of their components from the local market. They would also have to bring down the prices of their iPhones. iPhone SE was launched in March and the Indian price was initially 39,000INR (£467), while in US it was $399 (25,500INR or £307). The current price has dropped down to 25,000INR (£299), which is a mid-range phone for Indians.
According to the Wall Street Journal, the Indian assembling of iPhone SE will further drop that down by $100 (6,500INR or £78). However, these are far-fetched hopes expected from Apple, as they are seldom known to cut down prices and profit margins. The manufacturers would have a reduced cost of tax duties along with other legal formalities, so that way the prices can drop down. This will help the company provide their iPhones at a more competitive rate.
Indians are prone to indulge in iPhones, which is why they have massive growth opportunity in the country. Thus, with all the government regulations, they will still be competitive with other smartphone brands. The growth of smartphone penetration in India has gone up by 16% from one year to another, according to the results by the first quarter of 2017. On the contrary, the worldwide growth is 3% and that indicates potentiality in the Indian economy. With the growth of 4G network due to Reliance Jio, the country has become more lucrative for all smartphones companies.
An average smartphone cost in India is around £120, while the initial price of iPhone SE was £307. The Indian market is dominated by Chinese producers and they take up over half of the overall sales. Samsung is the largest brand that controls a little more than 25% of the Indian market. Apple’s market share is not more than 2% percent, but people are lured into the concept of having an iPhone.
Assembling different types of iPhone in India will let the company meet the local-sourcing need. Their move also relates to Indian Prime Minister, Narendra Modi’s, ‘Make in India’ initiative. The initiative pushes more local manufacturing than foreign imports.
The most challenging part is likely to bring down the prices of iPhones. It is the government’s wish to expect the iPhone SE prices to further drop down by £77, compared to the current rate. Apple is compensating for slowing down their unit sales and making more value from each device. The company needs to examine on how much profit they can make from the Indian market and what tactics can they use.