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The iPhone SE Is Just The Tip Of The Iceberg For Apple In India

This article is more than 7 years old.

In the last couple months, there has been a lot of buzz about Apple soon starting to manufacture the iPhone SE in India, so as to make it more affordable for the Indian consumer.

However, for Apple, local assembly/manufacturing of the iPhone SE is just the starting point for the company's plans in India, based on a report in the Economic Times.

According to Indian IT secretary Aruna Sundararajan, "Apple plans to move up the value chain in their next phase, in terms of producing the entire suite of products, definitely all iPhone models, for which their entire ecosystem of partners needs to move in."  

"They (Apple) have two primary asks (demands)—one that they should be able to import the components that they need, and second that it should be cheaper for them to manufacture here than to import," she said to ET.  "The second question is where government has not yet taken a view, because this is to be decided only after the GST (goods and services tax) is finalised."

Counterpoint Research estimates that India has now become the second largest smartphone market in the world, surpassing the U.S last year. The market research firm estimates that over the next five years, there will be close to a billion smartphones sold in India.

This is the opportunity Apple is gunning for in India as far as the smartphone market is concerned. Apple handsets are still out of the reach of most Indian smartphone users, given the fact that in 2016, about 80% of handsets sold in India were below the INR 10,000 price point.

Most of Apple's new handsets are priced over INR 50,000, and even the so-called affordable SE was priced at INR 35,000 when it was introduced in April of last year.

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According to earlier reports, Wistron is set to start assembly (and manufacture eventually?) of the iPhone SE at its Bangalore facility as soon as late April/early May.

Another research firm, CyberMedia Research, is estimating that 200 million smartphones will be made in/assembled in India this year compared to 83 million that were locally made and/or assembled in 2016.

Apple's plans to manufacture its other products in India are also being fast-tracked, given the fact that the company's largest contract manufacturer, Foxconn, is close to finalizing plans with the government of Maharashtra to invest $5 billion in assembly and manufacturing plants in that state.

An Apple spokesperson said to ET, "We've been working hard to develop our operations in India and are proud to deliver the best products and services in the world to our customers here. We appreciate the constructive and open dialogue we've had with government about further expanding our local operations."  

In a country where Apple products are considered the Rolls Royce of not just the smartphone market but also the PC market, the tablet world and the laptop arena, making these products more affordable locally will lead to very favorable impact to the top and bottom line for the company.

Of course, how quickly the government of India moves on pending issues like goods and services taxes (GST), tariffs and import duty concessions and other incentives asked for by Apple, its OEMs and other players considering investing in India, will go a long way in determining how serious Prime Minister Modi is about his 'Make In India' initiatives.

Apple is indeed looking at its next growth frontier square in the face and the future looks a lot brighter than it did just a couple of months ago despite the constant Apple related negativity we are bombarded with almost daily.

(Long aapl, long and short options)

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