Apple has opened its first retail store in India, spread over 20,000 square feet over two floors in the Jio World Drive mall in the Bandra Kurla Complex, Mumbai. The store will provide customers with the opportunity to explore Apple products and services. Apple has leased out the space in the mall for 11 year contract. The company will be paying ₹42 lakh per month as a rental for the store, and will also share a part of the revenues with the space owner. The store will be operationally carbon neutral, relying on 100 percent renewable energy, and will have its own dedicated solar array, making it one of the most eco-friendly stores in the region.

The doors were thrown open to thronging crowds by CEO Tim Cook himself. “The energy, creativity, and passion in Mumbai is incredible,” Tim Cook said in a tweet. India has become China-plus one market for Apple to produce iPhones. The U.S. Company now makes almost 7% of its iPhones in India through partners. Will Apple Stores in India facilitate enhancing its market portion in a nation that has been subjugated in recent years by Samsung and Chinese brands churning out low-to-mid-tier valued devices? 

At long last, it’s here. Twenty-seven years after Apple arrived India, 23 years from the time it started its maiden retail storehouse in the USA, and over two years after Apple’s online store was opened in the country, the physical Apple Store has arrived on Indian shorelines. On April 18, people aligned to click selfies with Apple CEO Tim Cook, who was in India at the inauguration of the maiden storehouse in Mumbai’s Bandra-Kurla Complex (BKC). Two days after throwing open the doors of the BKC store, Apple’s most supportable company-owned storehouse to date, the Cupertino-based tech titan greeted people into its storehouse in Delhi’s Saket.

Parenthetically, this was Cook’s second visit to India ever since he took over as CEO. And the Apple CEO had a chockfull agenda, meeting Reliance Industries Chairman Mukesh Ambani and Tata Sons Chairman N. Chandrasekaran in Mumbai followed by a parley with the Prime Minister, Union Minister of Railways, Communications, Electronics and Information Technology, and Minister of State of the Ministry of Electronics & Information Technology. Cook was also seen with personages like Bollywood actresses Madhuri Dixit, Raveena Tandon, and former cricketer Anil Kumble.

Is it a Right Click?

Too much was made of the Cook’s visit to India. The Americans would ask, what’s the big deal?! Behind this publicity or propaganda, there are a few significant queries. Will Apple Stores in India facilitate enhancing its market portion in a nation that has been subjugated in recent years by Samsung and Chinese brands churning out low-to-mid-tier valued devices? More crucially, will this potentially lead to a fall in iPhone prices?

Cook is wishing to repeat Apple’s China story in India. His finest flutter remains in the developing tendency of ambitious Indians spending and elevating to superior and extra expensive smartphones. India is also experiencing a ‘premiumification’ of the market. Smartphones valued more than $400 now account for 10% of the entire volumes of handsets dispatched versus 4% before the pandemic. This class of smartphones accounts for 35% of the whole smartphone market revenue.

Can Apple cash in on this trend?

That is where retail comes in. As a marketing plan, Apple will form a direct sales network by creating more stores in India by removing intermediaries like wholesalers and dealers. Consequently, Apple may undergo cost savings, and consumer pricing may acquire economies of scale as it magnifies its manufacturing footprint in India and makes more iPhones here as part of its plan to expand its supply chain from China. As manufacturing size increases, the average cost of producing each iPhone could fall. Accordingly, customers may pay a lesser amount of money. However, that would be a time-consuming haul as China still manufactures up to 8.5% of iPhones universally. The probability of China mislaying its domination over Apple’s manufacturing supply chain may not occur overnight.

Up till then, Apple may have to involve in a bit of adventure. The two Apple stores have an association with the Apple India Online store, hence, permitting buyers to make a purchase and collect that order from Apple BKC or Apple Saket. So, Apple has a chance to aim at tens of millions of smartphones in online sales every year.

Apple anticipates that the branded stores will further reinforce the general experience of being in an Apple ecosystem. Apple will be capable to manage end-to-end consumer experience and, this will further take its brand goodwill to one level up. One has observed numerous stories around the world of customers communicating confidently purchase feels from Apple branded stores and India. Cook is perhaps, wishing that the India trial may turn out to be more exciting than having vada-pav with Madhuri Dixit. But a substantive success story will only rotate around inexpensive iPhones. Till then, the adventures of Tim Cook will endure.

An Apple a Day…….

Apple’s entry into the retail galaxy in India has been observed with enormous fanfare, another zone that has already harvested huge benefits, and will benefit even more, are India’s exports.

Think exports from India and what generally comes to mind are software services, pharmaceuticals, and textiles. Perhaps it is time to take a closer look. India’s overall goods exports swelled by 6% YoY in FY23, but it is noteworthy that the topmost product clusters witnessed different growth trends. Petroleum products (12% YoY) was the only one of the top five product clusters which produced superior growth than total exports, with engineering goods (-5% YoY), gems and jewelry (-3% YoY), chemicals (2% YoY) and pharma products (3% YoY) all witnessed adverse or lukewarm progressive momentum.

Where did the Progress Come From, Then? The major portion of it was produced by electronic goods which witnessed an enormous upsurge of 51% YoY. It also indicated that electronic goods were the sixth-largest product cluster in India’s goods exports in FY23, having gone in front of ready-made garments for the first time, and had a portion of more than 5% of total goods exports. Electronic goods, thus contributed more than 30% of the total increase in exports, with none of the other chief product clusters excluding petroleum contributing considerably. While this tendency has augmented in FY23 as it has been improving for the last five years, with electronic goods exports rising at nearly four times the rate of total goods exports, having weakened previously. The progress in electronic products exports has been motorized by mobile phones.

Apple’s India production and exports have noticed a seismic swing in recent times. Its manufacture of iPhones in India climbed to $7 billion in FY23, with exports crossing $5 billion – approximately 50% of India’s overall smartphone consignments of $11 billion. It is a piercing increase from just 0.5 billion in FY21 and is a substantial rise over last year as well. It underlines just how quick the shift has been.

India presently accounts for 3% of Apple’s gross iPhone manufacture, up from 1% in 2021, and the enthusiasm enters from Apple’s strategies for the future.

The tech titan is projecting to manufacture 25% of its iPhones in India by 2025, which would aid to attain the government’s goal of $120 billion in electronics exports, and $55-60 billion in smartphone exports, by FY26. Nevertheless, this is a very aggressive timeline, and more genuine approximations are that India will manufacture 10% of the gross iPhone production by 2025. It is because China has tremendously well-advanced supply chains for phone production – it manufactures 70% of the world’s smartphones (India is at 16%), and India has only conquered the initial step in phone manufacture: final assembly.

With Apple considering diversifying its manufacturing away from China, it is not just iPhone assembly, but the production of iPhone casings, chargers, and cables, as well as AirPods and Apple Pencils, that India can probably gain in. With these products projected to produce revenue of over $25 billion internationally for Apple in 2025, seizing even a minor portion of the production pie here can remarkably heighten domestic value-addition and production growth.

Cook’s visit has accentuated the significance of India in Apple’s scheme of things. It may take years for Apple to shift any substantial share of its global supply chain to India, but the nation can take heart from the fact that the voyage towards that target has begun.

On the whole, an Apple a day could take India’s production troubles away!

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