A limited run of “Assembled in India” iPhone SE models is now rolling from the assembly lines in India, run by Apple's contract manufacturer Wistron, but the Cupertino technology giant is now seeking extend tax breaks for its suppliers to build iPhones in the country from scratch.
The Economic Times of India reported today that although Apple is in no hurry to assemble additional models in India beyond iPhone SE, it is allegedly planning to eventually expand production capacity and bring “Made in India” devices to overseas markets.
“Apple will focus on iPhone SE model both for India and overseas markets,” a government official said. “It is looking to start exports from India,” the person added.
Apple's manufacturer Wistron has been assembling a limited run of “Made in India” iPhone SE models for two months now in a facility set up at Peenya on the outskirts of Bengaluru.
Those phones currently don't ship overseas and don't carry a lower price tag even though they're made locally. Government officials aware of the matter say Wistron has not made any fresh request for approval.
“Apple will stick to making iPhone SE model at its Bengaluru plant for some more time and has no immediate plan to assemble its flagships iPhone 7 and iPhone 7 Plus in the country, according to the government source quoted earlier.
Just yesterday, the same publication reported of Apple's alleged plans to expand local production. According to that article, Apple could manufacture other iPhone models in India at a later stage and even set up a full-fledged manufacturing plant.
Apple is also planning to open its largest global store to date in India by 2020.
It's reportedly looking at 4-5 flagship outlets limited to metros over 5-10 years. The stores will be located at prime locations and should have enough class to make them tourist attractions.
Lastly, the Cupertino giant could launch a dedicated online store in India by October.
After kicking off local iPhone SE production in Wistron's manufacturing facility on the outskirts of Bengaluru, Apple is now planning to build its largest global retail store ever for India.
When finished, the outlet will be massive: 7-10 times larger than that of rival Samsung, covering between 10,000 and 15,000 square feet of retail space, or roughly double the size of its other global stores, The Economic Times of India reported yesterday.
In terms of raw footage, it's going to be Apple's largest global store to date. By comparison, the average global Apple Store size is about 8,500 square feet.
While the store may not open before 2020 because Apple is yet to receive approval from the government for its retail foreign direct investment plans, two industry executives said the firm would open other stores at prime locations either in a mall or high street, some of which could resemble the flagship Fifth Avenue store in New York City.
An excerpt from the article:
Apple Stores in India will be limited in number, the executives said. The company is looking at 4-5 flagship outlets limited to metros over 5-10 years. This is due to the fact that each store requires huge space to suit its architectural design, which makes them a retail destination in itself attracting even tourists.
Discussing the upcoming flagship store, one of the sources said:
Apple wants to initially set up two stores, one in New Delhi and second one in Mumbai, said one of the executives. They want the stores to be truly iconic right from the design to the location. However, getting desired space will take time since 10,000-15,000 square feet of prime location is not readily available.
At this size, It will be the biggest single-brand electronic stores in India.
The article states that Apple's retail team visited India last month to meet realtors and mall managers, understand the retail market, see potential sites and lay down specifications to the India team and real estate consultants. They reportedly signed non-disclosure agreement with various stakeholders regarding the store plans for 2020-2021.
The development marks a major change for the Cupertino tech giant given it currently sells iPhones through franchisee-run exclusive brand stores, multi-branded and neighbourhood stores and ecommerce marketplaces.
The same publication had earlier reported that the iPhone maker may initially start an online-only store in India by this year, which won't require an approval since the government allows companies to directly sell online locally manufactured goods.
Recently, Apple committed to running its Indian operations 100 percent from renewable energy by the end of this year.
Tim Cook recently disclosed that Apple expects its Indian operations to be run completely from renewable energy within the next six months. Cook said that during a Sunday meeting with Indian prime minister Narendra Modi at a business summit in Washington, according to a person familiar with the discussion who spoke with Reuters.
The move is part of Apple's mission to leave the world better than we found it.
He also highlighted the economic impact Apple is having on India:
We have a ton of energy going into the country on a number of fronts. We believe, particularly now that the 4G infrastructure is going in the country and it's continuing to be expanded, there is a huge opportunity for Apple there.
Apple has generated 740,000 jobs in India thus far and Indian developers have created nearly 100,000 apps for its App Store, said another person familiar with the talks.
Cook said Apple's sales in India grew by “strong double digits” in the most recent quarter, but didn't disclosed how much revenue the company generated from Indian operations.
As a limited run of ”Assembled in India” iPhone SE units went on sale in many Indian cities, Apple is seeking additional concessions from the Indian government as it looks to expand its presence in the world's third-largest smartphone market behind the United States and China.
Among other things, the Cupertino tech giant is seeking permission to open its own retail stores in India where it currently sells iPhones through resellers.
First iPhone SE units assembled in India have gone on sale in many cities in the country, including the city of Bangalore near which the handset is being assembled in a facility operated by Apple's contract manufacturer Wistron.
The Indian Express reported today that the iPhone SE units manufactured in India don't carry a lower price tag because they are made locally due to Apple's policy of keeping the pricing more or less the same across the globe. In fact, these phones are “priced the same as other models manufactured in China,” according to The Indian Express.
Currently, a small trial run of limited iPhone SE units has been produced. Although the handset is now selling in many Indian cities, customers interested in the handset may not be able to get their hands on one until Wistron ramps up production.
These phones have “Designed by Apple in California, Assembled in India” printed on their back.
Apple's smartphone market share of the Indian market barely hovers above three percent because its aspirational handset is too expensive for many average consumer in the 1.32 billion people market.
But the Cupertino giant is taking steps to rectify the situation and has now permitted local retailers to slash prices of older-generation models such as iPhone 5s, which make up more than half of Apple’s shipments to the subcontinent.
Bloomberg reported Monday that Apple is now letting stores and online retailers such as Amazon.com and Flipkart slash iPhone prices.
iPlanet, a local reseller, prices iPhone 5s at 20,400 rupees, which works out to about $300. Apple no longer sells iPhone 5s in the US, but the most similar model, iPhone SE, starts at $400 in the US, without taxes or fees.
The device was listed at 15,999 rupees during an Amazon sale in May, or about $250. Retailer Flipkart lists iPhone 6 for 24,990 rupees, or approximately $390.
Here's an excerpt from the article:
Besides discounts, retailers have been pitching iPhones with cash-back offers, product exchanges, and monthly payment plans, all aimed at making it easier for young Indians to spend a month’s earnings or more on an iPhone 5s.
Apple is hiring an undisclosed number of 'affordability managers' in the country to negotiate with banks and other lenders on behalf of potential buyers.
Older devices accounted for a Counterpoint Research-estimatd 55 percent of the 2.6 million handsets Apple shipped to India in 2016. “As the premium segment grows in India, Apple wants a larger slice of it,” said Anshul Gupta, research director at market researcher Gartner.
“The bigger the iOS base, the brighter Apple’s future in India,” he added.
India is the smartphone industry’s fastest-growing market and an increasingly important market for Apple. The company has now started assembling iPhone SE devices in India via its contract manufacturer Wistron and is seeking additional concessions from the local government in an effort to boost local iPhone production.
The Wistron manufacturing facility is currently assembling “a couple thousand” iPhone SE units as a trial run, according to people familiar with the matter.
Tim Cook & Co. are predicted to officially bring Apple Online Store to India and enable Apple Pay transactions in the country.
In March, the iPhone maker opened the iOS App Design and Development Accelerator in the Yelahanka area of Bengaluru, which is the home of India’s startup scene. The populous country has some of the most vibrant and entrepreneurial iOS development communities in the world.
Despite low buying power, India with its population of 1.32 billion people represents a massive marketing opportunity for the increasingly popular smartphone payment services. Small wonder that the Cupertino company now appears to be preparing to bring its own mobile payments service to its customers in India, said a new report.
Apple Pay currently works in sixteen major markets.
According to a BusinessStandard article, the iPhone maker has submitted at least five applications with the Indian Patent office over the past year, all related to its digital payments system. The patent applications range from using biometrics to authenticate payments to securely transferring payment to a device such as a point of sale device.
While Indian law clearly states that software is intrinsically not patentable, exceptions exist for devices with software. If Apple's patents are granted, Apple Pay could hurt homegrown digital payments firms such as Paytm, Mobikwik, Freecharge and several others.
Samsung Pay launched in India in March 2017, while Google plans to bring Android Pay there later this year by anchoring the service to the government-backed Unified Payments Interface.
Last week, Facebook made a patent application of its own with the Indian Patent office. It outlines a digital wallet service that would presumably be integrated into its popular Messenger and WhatsApp messaging services.
Apple has been doubling down on the Services category as a way to boost sales of iPhones in India and elsewhere. Recently, the firm began assembling iPhone SE in Bangalore, in a facility run by its supplier Wistron, marking the first time the cupertino company has assembled any iPhone model in the country.
India has offered tax concessions to Apple to expand iPhone production in the country just days after it was announced that the Cupertino giant kicked off local iPhone SE production.
This is part of Prime Minister Narendra Modi's plans to boost local manufacturing.
Ravi Shankar Prasad, the central minister for Electronics and IT, told Reuters this morning that Apple has already approached the Indian government regarding potential expansion of its manufacturing facility in the southern Indian technology hub of Bengaluru, operated by its Taiwanese supplier Wistron which as of recently has been assembling iPhone SE there.
According to the news gathering organization, the Indian government has offered to permit Apple to import handset components intended for use in local manufacturing tax free.
Here's an excerpt from the article:
Among a set of tax concessions, Apple had initially sought a 15-years tax holiday for all components that it would import for setting up a manufacturing facility in India.
A panel of ministries rejected that demand and has offered a phased program to increase the share of local production in the manufacturing, Aruna Sundararajan, Secretary at the Ministry of Electronics and IT said.
“We have offered them tax exemptions on those components which could not be manufactured in India,” Sundararajan told Reuters.
Local manufacturing component would have to be increased gradually, he added.
The tax concessions will be subject to the condition of increasing local value addition over a period of time, to which Apple has reportedly agreed to.
“It will be a little early to say that India and Apple have agreed on the common ground,“ cautioned a government official.
It's been speculated that Apple and Wistron began making iPhone SE in India as a way to lower the handset's price point in order to make it more affordable to Indian consumers.
Apple has officially kicked off the initial production run of an unspecified “small number” of iPhone SE handsets in its Bangalore plant in India, marking the first time the company has assembled any iPhone model in the vast 1.33 billion people market.
As previously suspected, the manufacturing of the cheapest iPhone model was handled earlier this month by Taiwanese contract manufacturer Wistron via its assembling unit located in Karnataka, a state in the south western region of India.
Apple confirmed in a statement that it has begun the initial production of a small number of iPhone SE handsets in Bangalore. The Cupertino company will begin shipping the devices to domestic customers later this month, with the first shipments potentially hitting retail stores as early as this week or next, according to a person familiar with the matter.
A state official with direct knowledge of the matter told the publication that the Cupertino giant “could seek more production” within the country in the future.
It's unclear if Apple will reduce iPhone SE pricing in India to better compete with inexpensive smartphones from rivals. In India, according to Deutsche Bank’s annual “Mapping the World’s Prices” survey, the 128-gigabyte 4.7-inch iPhone 7 model costs about $900 versus an average selling price of $815 in the US.
iPhone SE costs $399 in the United States. By comparison, the current average going rate for iPhone SE in India is about $320. Some analysts think Apple should price the phone really aggressively were it to move a good number of these devices in the country.
“In three to five years, these users will be able to graduate to a standard-priced iPhone,” said Faisal Kawoosa, principal analyst at research firm CMR.
According to IDC, the average smartphone price in India is about $250.
Local government officials reportedly believe Apple could sell iPhone SE in India for as low as the equivalent of $220 in Indian currency. Apple's manufacturing partners assemble most of the iPhones the company sells in massive factories in China, with a smaller number of older iPhone models being manufactured in Foxconn's facilities in Brazil.
Before making its long-expected offline retail presence in India, Apple may start selling the locally produced iPhone SE through its online store in the world's second most-populous country. According to a report Monday by the Economic Times, Apple may also sell locally sourced accessories via its online store.
However, the report states that the iPhone maker won't compete on price with online marketplaces for the items carried via its Indian online store. About half the iPhone models the Cupertino firm sells in the country are purchased online.
Phil Schiller, Senior Vice President of Worldwide Marketing and the guy in charge of all App Stores at Apple, announced on Twitter this morning that the company's iOS App Design and Development Accelerator in the Yelahanka area of Bengaluru in India is officially opening. Bengaluru is the home of India’s startup scene. The populous country has some of the most vibrant and entrepreneurial iOS development communities in the world.
Apple also published useful resources at developer.apple.com/accelerator, including information pertaining to local iOS development scene.
Apple is set to start assembling its lower-priced iPhone SE in India in the coming months, an industry source with direct knowledge of the matter told Reuters on Friday.
All iPhone SE units will be made in a facility that Apple's contract manufacturer will set up at Peenya on the outskirts of Bengaluru. All devices will be targeted at the domestic market.