WSJ: Apple close to inking deal to have its products made in India

WSJ: Apple close to inking deal to have its products made in India
With sales of the Apple iPhone declining in China, Apple has been lavishing attention on India which is now the second largest smartphone market in the world. Last year, then Piper Jaffray analyst Gene Munster said that Apple could add 62 million iOS users in India. Munster said that for this to happen, Apple would have to increase its presence in the country to the level it has in China. One way to accomplish that would be to dot the Indian landscape with Apple Stores. But local regulations would require that 30% of the products sold in an Indian Apple Store be made in the country. Apple's attempts to have that rule invalidated for its physical stores failed to catch on among government officials.

According to this morning's Wall Street Journal, which cited an anonymous Indian official, Apple executives have been meeting with senior government members. The official, who has first hand knowledge of what is going on between Apple and the Indian government, says that both sides are close to agreeing on a deal that would result in Apple manufacturing its products in India, including the iPhone. Currently, the American tech firm hold less than a 5% share of the Indian smartphone market. One major roadblock for Apple is that salaries in India are extremely low, and the majority of smartphone purchases are made for less than $150. The top iPhone model in the country is the Apple iPhone 5s, priced at $300. Pricing is a major issue that Apple is going to have to work at to succeed in India.

Apple is seeking some incentives from the Indian government in order to start manufacturing in the country. One source who reportedly works with Prime Minister Narendra Modi,  says that Apple is seeking a 15-year tax holiday on imports of components and equipment. That might help Apple lower the price of new iPhone units built in the the country, which would have to compete with low-priced Android models. The previously mentioned anonymous official close to the deal says that "Many of the incentives sought by Apple are workable." It will be up to the Finance Ministry to decide whether to grant tax and tariff exemptions to the company.

A deal will help both Apple and the India government. The former will get the opportunity to compete in a market where smartphone penetration is only about 15%. The latter gets the opportunity to provide higher paying jobs for its people. Just the other day, there was speculation that Apple had already decided on using India's Wistron to manufacture the iPhone in the region.

source: WSJ

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25 Comments

1. peace247 unregistered

Yup.... I'm from India and from what i know majority of middle class like me are earning around $600-1000 per month.

6. ibend

Posts: 6747; Member since: Sep 30, 2014

that much for "middle-class"? part-timer college student can make more than that around here :-/

9. tedkord

Posts: 17365; Member since: Jun 17, 2009

Different economy.

11. kiko007

Posts: 7493; Member since: Feb 17, 2016

Exactly.

13. sgodsell

Posts: 7383; Member since: Mar 16, 2013

Apple sold last year roughly 2.5 million iPhones in India (2016). Still a far cry from all the others selling smartphones in India. The biggest winners are Samsung and all the Chinese OEMs are dominant in India. Even the local smartphone OEMs in India out sell Apple by a large margin. Apple has proven that you do not get the best value for your money.

15. kiko007

Posts: 7493; Member since: Feb 17, 2016

Jesus Christ.....what the f**k did that have to do with my comment? What the f**k did your comment contribute to the chain at all? I'm starting to think you are genuinely autistic...

17. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Yes because the average India can only afford a phone less than $200 on retail. Remember, Apple resurrected the iPhone 4 just for India and even at $350 it was to expensive. So making the phone in India I assume, would drop the cost because they can simply buy phones from their own local factory. However, what kind of phone is Apple going to build in India? This is where APple is stupid. They don't make region specific models, because that woudl mean they would have to be like Smasung, Nokia and others making cheap phones. If Apple makes cheap phones, then they can no longer call themselves a premium brand and Apple margin and profits would go down do to higher overhead for more models and not selling as many as the premium models. Apple now sells 150M~200 iPhone with 5 selling models. Even if Apple sells older models in India cheaper, they still won't be cheap enough to compete against OEM's like Samsung. So what would a $200 iPhone be like? It would be worse than the Galaxy J series which is a very nice phone. It would be some cheap option like the Galaxy V(5) which cost about $150USD in the Philippines. So the fact is, even if Apple opens a factory in India and stores, they still won't be able to sell a mass amount of phones because Apple won't be able ot meet the price restrictions needed for more sales. The iPhone 6S Plus 64GB on eBay India is $42000 Rupees or $616USD. If your income is only $1000USD in a month, even on a monthly plan it woudl still be vvry expensive. Also carriers outside the US don't subsidize phone. So you have to buy them outright, or put down a hefty down-payment because other countries don't have a system of "credit" like we do. So again my question is, what "affordable" iPhone is Apple going to build in India? India has over 1B phone subscribers. How many will Apple get? I am betting less than 100,000 people in India have an actual iPhone. Because the vast majority cannot afford them. Just like in the Philippines less than 100,000 have an iPhone. Based on this graphic -http://marketingland.com/wp-content/ml-loads/2014/10/Screen-Shot-2014-10-20-at-1.45.30-PM-800x515.png - from 2014, it shows that when you combine all thr sales of the Asia Pacific for one quarter, Apple sold only 5000 phones. I checked one year oh Globe Telecom and for the whole year they sold less than 10,000 iPhones for post and prepayed subscibers combined. So basically outside the Americas and Europe, Apple has poor sales. Based on Apple share breakdown, 1/3 of there sales are in the Americas. 1/3 are in Europe for all combine countries and 1/3 are everyone else and they are dropping. India is not goign to help with a $700 phone. It cost Apple $200 to make an iPhone. If they don't sell them at cost, who will but them?

22. mikehunta727 unregistered

Apple is making moves in the only market there in, the premium smartphone market, and Apple shipped over 60% of premium smartphones shipped in India last year.. So they are making gains and ground in India Also note that the iPhone is the best selling individual smartphone every year, it has far from poor sales worldwide, it is yearly the best individual smartphone so. Try again..

23. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Do you have link to the sale figure? Otherwise its another here say crap talk.

25. mikehunta727 unregistered

Shipped numbers, not sales.. Shipped doesnt always equal tl sales but they shipped about 60% of premium smartphones in India last year https://www.google.com/amp/mashable.com/2017/01/24/apple-iphone-shipment-india-2016.amp?client=safari "More interestingly, however, Apple has started to dominate in the premium segment of India’s smartphone market. In last quarter if 2016, Apple's iPhones accounted for 62 percent of all premium smartphones shipped. "

14. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

So what perecentage of yoru country would you say, could afford an iPhone? Because I think Apple thought when they joined China Mobile, which is China's largest telecom, they thought they were goign to get a windfall of new users in the high millions and they barely got a few million. Like my wife is from the Philippines. The average high paying monthly income is $350~400USD. Globe Telecom is the Philippines largest provider with over 50M subscribers. Yet based on typical prepay or post pay sales, they sell less than 100,000 iPhone in a year in a country where the population is 100M

20. cnour

Posts: 2305; Member since: Sep 11, 2014

Your situation is going worst...... the first step to become better is to avoid reading Apple news.

2. LiveFaith

Posts: 475; Member since: Jul 04, 2015

Make India Great Again.

3. Stranger

Posts: 73; Member since: Jan 19, 2017

Waiting for pixel phones to be manufactured in India !

4. Acuratl

Posts: 21; Member since: Oct 25, 2016

Wooow that's the company you guy's are supporting a company the doesn't do anything for the USA economy. Sad sheep's.

5. jellmoo

Posts: 2599; Member since: Oct 31, 2011

Go ahead and list the smartphone manufacturers that build their phones in the US. I'll wait.

10. palmguy

Posts: 982; Member since: Mar 22, 2011

Motorola used to before it was sold :'(

18. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

RIM is the only company that makes phones in the Americas...Well in Canada to be specific.

21. jellmoo

Posts: 2599; Member since: Oct 31, 2011

And even that isn't the case moving forward.

8. bucky

Posts: 3785; Member since: Sep 30, 2009

What phone company does?

12. sgodsell

Posts: 7383; Member since: Mar 16, 2013

I think BLU is another one.

16. jellmoo

Posts: 2599; Member since: Oct 31, 2011

Designed in the States but made in China.

7. smallworld

Posts: 517; Member since: Jul 13, 2012

A great middle finger to Trump

19. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Trump bashed Apple for not making any of their products here. Here is what's funny. Gonna show how much BS Apple and any America company who don't make their peoducts here with claims they woudl be too expensive. Apple use to make the Mac right in California. When they did, the Mac cost $3000 on retail. Here we are 30 years later and the Mac is being made in China and it still retails for $3000...I'm speaking of the desktop models, not the laptops. So why aren't they cheap? The claim phones would double in cost? I did a few months ago read an article that stated to some degree that would be true. But it doesn't have to be. If Apple brought their factories here, they woudl receive tax breaks that would stave off production costs. The benefits would outweigh the downsides. Sure Apple cost for employment would go up. more workers means salaries and insurance costs. But insurances costs go down when you add more employees. The question is, would Apple gain a significant amoutn of sales makign their products in the USA? LIKELY NOT. Which means they will past off as much cost to their products as they do now to make a higher profit. I remember back in the old days, if a company made $500M in profit it was a big deal. Now it isn't unless you make BILLIONS in profits. To me it seems like a waste of money for Apple to even sell phones outside of the Americas and Europe. Because Apple can't compete on pricing with ANY OEM because they make one phone and Apple claims they can't make a cheap phone that woudlnt be a piece of crap, yet the iPhone is cheap at $200 to make

24. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

No change in selling price just a higher profit margin and more money to park at their offshore accounts.

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