Apple bets big on India as first flagship store opens in Mumbai

Apple has opened its first flagship store in India in a much-anticipated launch that highlights the company’s growing aspirations to expand in the country it also hopes to turn into a potential manufacturing hub.

The company’s CEO Tim Cook on Tuesday posed for photos with nearly 200 Apple fans who had lined up outside the sprawling 2,600-square-metre (28,000-square-foot) store located in the Reliance-owned Jio World Drive mall in India’s financial capital, Mumbai, its design inspired by the iconic black-and-yellow cabs unique to the city.

A second store will open on Thursday in the national capital, New Delhi.

“India has such a beautiful culture and an incredible energy, and we’re excited to build on our long-standing history,” Cook said in a statement earlier.

The tech giant has been operating in India for more than 25 years, selling its product through authorised retailers and the website it launched a few years ago. But regulatory hurdles and the pandemic delayed its plans to open a flagship store.

“The vibe here is just different,” said 23-year-old Aan Shah, who travelled from Ahmedabad in neighbouring Gujarat state to attend the launch. “It’s not like buying from some normal store. There’s just no comparison. It’s so exciting.”

His love for Apple has earlier taken him to store openings in New York and Boston, where he once got a chance to meet Cook.

The store was opened for bloggers and tech analysts at a private event on Monday, while many Indian film and television celebrities were seen meeting Cook that night.

The new stores are a clear signal of the company’s commitment to invest in India, the second-largest smartphone market in the world where iPhone sales have been ticking up steadily, said Jayanth Kolla, analyst at Convergence Catalyst, a tech consultancy.

The stores show “how much India matters to the present and the future of the company,” he added.

For the Cupertino, California-based company, India’s sheer size makes the market especially encouraging.

About 600 million of India’s 1.4 billion people have smartphones, “which means the market is still under-penetrated and the growth prospect is huge”, said Neil Shah, vice president of research at technology market research firm Counterpoint Research.

Between 2020 and 2022, the Silicon Valley company has gained some ground in the smartphone market in the country, going from just about 2 percent to capturing 6 percent, according to Counterpoint data.

Still, the iPhone’s hefty price tag puts it out of reach for the majority of Indians.

Instead, iPhone sales in the country have thrived among the sliver of the upper middle class and rich Indians with disposable incomes, a segment of buyers that Shah says is rising.

According to Counterpoint data, Apple has captured 65 percent of the “premium” smartphone market, where prices range up from 30,000 rupees ($360).

In September, Apple announced it would start making its iPhone 14 in India. The news was hailed as a win for Prime Minister Narendra Modi’s government, which has pushed for ramping up local manufacturing ever since he came to power in 2014.

Apple first began manufacturing in India in 2017 with its iPhone SE and has since continued to assemble several iPhone models in the country.

Most of Apple’s smartphones and tablets are assembled by contractors with factories in China, but the company started looking at potentially moving some production to Southeast Asia or other places after repeated shutdowns to fight COVID-19 disrupted its global flow of products.

“Big companies got a jolt, they realised they needed a backup strategy outside of China – they couldn’t risk another lockdown or any geopolitical rift affecting their business,” said analyst Kolla.

Currently, India makes close to 13 million iPhones every year, up from less than five million three years ago, according to Counterpoint Research. This is about 6 percent of iPhones made globally – and only a small slice in comparison to China, which still produces about 90 percent of them.

As Apple pushes to make India a bigger manufacturing base, some of its products, including iPhones, are being assembled in the country by Taiwanese contract electronics manufacturers Foxconn and Wistron Corp. It also plans to assemble iPads and AirPods in India.

Last week, India’s Commerce Minister Piyush Goyal said the government was in regular touch with Apple to support their business here and that the company had plans to have 25 percent of their global production come out of India in the next five years.

The challenge for Apple, according to Shah of Counterpoint, is that the raw materials are still coming from outside India so the tech company will need to either find a local supplier or bring their suppliers, based in countries like China, Japan and Taiwan, closer to drive up production.

Still, he is optimistic this target could be met, especially with labour costs being lower in India and the government wooing companies with attractive subsidies to boost local manufacturing.

“For Apple, everything is about timing. They don’t enter a market with full flow until they feel confident about their prospects. They can see the opportunity here today – it’s a win-win situation,” Shah said.