Of late, there have been much talks about Apple looking at the Indian markets with increasing intent. News reports have closely followed Tim Cook’s first hints of focusing on India, the company’s meetings with the Indian government regarding sourcing exceptions and relaxed taxation charges, and the constant rumble of Apple’s first Indian assembly ventures just being ‘round the corner.
There has also been ample skepticism, too. Many have stated that even if Apple does indeed start making (read: assembling in limited quantities) iPhones in India, it may not really impact how the company’s immediate future will be affected. With all of these arguments in sight, we decided to take a look at the biggest differences that Apple’s iPhone assembly plant in India may actually make.
Affordability
Straight off the bat, Make in India ventures do not really make products drastically affordable. The assembly plants that companies have set up will still take years to develop into fully functional manufacturing hubs complete with core component supply chain networks across the nation, and most importantly, skilled labour to carry out such mechanical operations. Apple’s contract, given to Taiwan-based Wistron Corp., is no different at the core.
The ODM is setting up a plant in Bengaluru, India, which will be dedicated to making Apple’s coveted iPhones. This assembly plant will still be sourcing materials from outside, and as such, this does not theoretically impact the overall price of the concerned smartphone. But, for Apple, this situation is going to be slightly different as there are multiple government relaxations in question now. As the Indian government aims to make the nation a hub for engineers, traders and skilled workers alike, Apple is banking on the fact that it has a lot to offer India in terms of these very factors, and looking for significant rebates on taxes and norms to make iPhones more affordable.
Government concessions
Will they? Won’t they? It is common knowledge, cited across multiple sources, that Apple’s officials have met Indian government officials from varying echelons of hierarchy to discuss about Apple-specific rebates in terms of taxes and local component sourcing norms to facilitate the company’s tryst with India.
Also in question is Apple’s side plan to import, refurbish and resell old iPhones in India, which has not quite been received well by our nation’s leading minds. Based on a Bloomberg report on the same, Apple’s primary obstacle behind taking over the Indian market is pricing, and Apple plans to deal with this by introducing officially refurbished iPhones at a considerably discounted price.
The Indian government, however, is wary. Allowing a company to import its used products with limited life span left may mean adding to the nation’s electronic junkyard, unless meticulously dealt with. While Apple has since moved on from the refurbishing idea to now talking about commencing iPhone SE assemblies in India, the idea still remains.
The deal is, allowing Apple to introduce refurbished iPhones in the country may actually make sense if we manage to insert strong recycling clauses in the contract. This is actually possible, seeing that Apple has one of the strongest reverse logistics mechanism in the world, and invests significantly more into reducing the junkyard footprint than most others. If we do manage to obtain truce, it may be a win-win for both parties. For India, introducing (reasonably) inexpensive iPhones would be a positive advertisement for Make in India, and who can be a better flag-bearer than Apple itself?
For Apple, though, this would be a stepping stone into getting the concessions it demands, and it might just get its own way. Looking at future prospects, allowing concessions now may actually lead to greater eventual profits and a possible shift in the paradigm of the Indian smartphone market. If this setup works, we may soon see more businesses looking forward to invest in India. This would also be an opportune moment to build upon supply chains, component makers and skilled workers, and this one act may actually put all of these parallels in motion.
Giving personalised concessions to a rich multinational giant may initially be met with too many protests, and even spark socio-political revolts in certain places (the government has already been accused of blindly favouring the rich), but looking at the greater picture, government concessions might be an affordable price that India pays to evolve its industrial landscape.
Why iPhone SE?
The Apple iPhone 5s has downright been the most sold iPhone in the country. Even after three full years, many are still using the phone, with relative ease in comparison to similarly aged Android or Windows counterparts. The fact that it now sells for just Rs. 17,990 has attracted many buyers with a wish to experience iOS, and many would have thought making what remains of the iPhone 5s to begin with in India would have attracted more buyers.
Apple, however, has greater sights set on its future in India. With sales and shares dwindling in developed nations and profits taking a hit, India can be a crucial market that revives Apple’s iPhone sales for the time being. For that, relying on a phone that will no longer receive software updates from late 2017 would be somewhat suicidal.
The solution? The most affordable iPhone in India right now – the iPhone SE. Flaunting the same design as the iPhone 5s with upgraded internals, the iPhone SE should be a good performer and receive all software and security upgrades for at least two more years, if not three. With the Apple iPhone SE already selling at around Rs. 30,000 in India, making this one in compliance with government rebates can bring down its price by a significant margin, giving Apple hope of finally presenting India with an iPhone that is more than an outdated afterthought for most of its population.
The Apple iPhone 5s may be the present holder of the highest iPhone sales figures by volume in India, but Apple wants to change that by bringing India up-to-date in terms of its hardware. Well, at least close to being up-to-date. This can also make space for Apple and other international giants to provide more services in India, and a larger network of iOS devices may prompt better development of Maps, News and other Apple services. There is also the ever-faint knock of Virtual Reality, and all of this may spell bildungsroman for the average Indian consumer.
Why? Because, better hardware in a nation with the generally great perception of an iPhone has the potential to evolve not just the iPhone maker, but also its entire ecosystem, including network speeds, necessary infrastructure, software and awareness. All of this, in turn, can spell huge buck for our industry.
The final print
Apple is now expected to commence assembly of iPhone SE units in India by April 2017, with Wistron Corp. Once it does, and in the coming days, it remains to be seen what the government decides regarding tax rebates and other claims that Apple has put in. If this does mature, it may very well set precedence for future companies to set up shop in India. Industries like automobiles can also benefit from the eventual outcome of Apple and India’s relationship, which as of now begins with the hope of a more affordable iPhone SE.
Very little, though, has happened as of now, and we might just be jumping to conclusions even before the episode commences. The outcomes we speak of here are no immediate repercussions, and would only occur in the long run, which further makes Apple’s entry to India no temporary venture. As for you, though, would you be patiently waiting for Apple to fully unfurl its wings? Or would you give it up before the impacts start showing?
Do let us know, as we wait for the government and Apple to speak more about what would happen.