Apple Breaks New Ground While Making iPhones in India

Apple has announced it will assemble iPhones in India for the first time, in a push to take more of a foothold in the vast market.

India has a quickly developing economy and a growing middle class, and the country also has around one billion potential consumers. Any global company, therefore, would want a piece of the Indian market. It’s not like Apple to be behind the curve, but it’s fair to say the tech giant hasn’t quite dominated in India like it has in other parts of the world.

Production has begun in Bangalore, India’s tech capital, of iPhone SE handsets – which is the cheapest available version of the iPhone and has a a 4-inch (10 cm) screen. The Bangalore plant is run by contract manufacturer Wistron of Taiwan.

“We’ll begin shipping to domestic customers this month,” Apple said in the statement, quoted by CNN. This rollout represents the first iPhones in India to be sold to customers with a “made in India” label.

Why has Apple been slow to be a big player in India?

Apple does sell products in India via local distributors, but there’s no Apple store in the country yet. This is likely to change, however, given that Apple wants to crack the market and also that India is predicted to become the world’s second largest smartphone market this year, overtaking the US.

There are several reasons Apple is not as much of a leading brand in India as in other parts of the world.

Samsung is currently dominant in India, and Chinese brands like Oppo and Vivo are similarly an obstacle of competition for Apple.

Apple also has faced the problem of strict Indian government rules on the relationship between where a product is made and where it is sold. Foreign companies selling in the Indian market are required to also make their products in India (at least in part), or face very large levies.

This was obviously a major motivation in Apple’s drive to start making iPhones in India. This landmark advancement was achieved after long discussions between Apple and the Indian government, and even a visit to India by CEO Tim Cook in 2016.

SE will be the first iPhones in India to be made in the country
The iPhone SE is the lowest priced iPhone. Source: Apple Insider

Are iPhones in India prohibitively expensive for local customers?

iPhones at the sorts of prices charged in the US would be prohibitively costly for most Indian consumers. However, as well as beginning its plan to make iPhones in India with production of the value model, the SE, Apple will charge less for that same model as it would elsewhere.

Apple generally likes to keep costs similar worldwide, perhaps another reason the company has stalled when it comes to fully entering the Indian market.

But according to MarketWatch, the Indian government hopes the cost of the new, Indian-made SE could be around $100 less than the current $320 some Indian vendors charge for imported models. This would be considerably less than the $399 price in the US (although still more than the average Indian smartphone cost of around $150).

What does this mean for the Indian economy?

India is keen for Apple and its contract manufacturers to expand in the country, bringing a significant boost to the Indian economy and job growth.

Officials in the state of Karnataka, where Bangalore is situated, are expected to meet soon with Wistron Chairman Simon Lin and executive David Shen to discuss the bigger picture for business in the state.

“Apple coming to India is a [matter of] pride for us,” said R.V. Deshpande, Karnataka’s commerce and industries minister, following the recent announcement. “We are trying to get them in Karnataka as it’s the right place with all the required ecosystem.”