Apple has now shortlisted a few locations in India where it plans to launch its first retail store. Unsurprisingly, Apple wants prime real estate. Bloomberg says the company is looking at ‘upscale sites in Mumbai’, with glamor analogous to Fifth Avenue in New York.
The publication says a decision will come within weeks, at which point Apple will make a formal application to the Indian government. Up to now, Apple has been prevented from launching its own stores in India due to domestic manufacturing requirements.
India requires that retail companies must manufacture 30% of their products in the country. This locked out Apple as almost all of its devices are manufactured in China.
However, the company has deployed (some of) its cash pile in the last couple of years to dramatically ramp up iPhone production inside of India, thereby meeting the local production laws. The local production also allows Apple to avoid hefty import taxes on the sale price of its products, an essential cost reduction for the price-sensitive Indian smartphone market.
For a couple of years now, Apple was producing the iPhone SE and iPhone 6 in India in collaboration with its supply chain partnerWistron. Through Foxconn, Apple is now making many more models and the company is expected to release Made-in-India iPhone XR models later this year.
India is seen as a key growth market for smartphone makers but Apple has struggled to break through; the iPhone accounted for less than one percent of phone sales in 2018. The comparatively-high price of Apple’s offerings is hurting demand as local salaries are much lower than they are in the US. The median average yearly wage in India is less than the cost of an iPhone.
Having an official retail presence is just one step in improving Apple’s Indian sales. Bloomberg suggests that Apple’s proposal should see expedited approval from the Indian government in the early June timeframe. That being said, Apple Store construction is slow so it seems unlikely that the new India flagship store would not open until 2020 at the earliest.
