Apple appears to be moving forward with plans to begin assembling its phones in India, but that doesn’t necessary mean that its prices will drop in the country.
India’s Economic Times today reported that Apple will begin assembling the iPhone SE in the coming months in Karnataka, adding more detail to comments from the state’s minister of IT earlier this month which seemingly confirmed an arrangement.
The Cupertino-based tech giant is likely to go ahead with the Bengaluru assembly plan without waiting for the government’s nod for the list of tax concessions that it had sought along with other demands. The company wants to “experience manufacturing in India”.
The Economic Times newspaper earlier on Friday reported Apple planned to initially assemble 300,000 to 400,000 iPhone SE handsets in India. The industry source told Reuters the numbers would be substantially lower to begin with.
Apple currently prices the iPhone higher in India than any other country in the world. It is widely assumed that the cost is down to high import taxes that the company is subject to — since it manufacturers devices in China — and so it figures that any move to assemble devices locally could reduce the price of iPhones in India. That’s important because Apple continues to struggle to gain any meaningful share of India’s smartphone market, which is one of the few tipped to grow consistently.
A recent IDC report found that Chinese smartphone brands dominated India’s phone market in the final quarter of 2016, with no Indian brands in the top five for the first time. Apple, meanwhile, had its best year of sales in India — selling 2.5 million units — but that represents a tiny fraction of overall sales — over 28 million devices shipped in Q4 2016 alone.
But for those thinking local manufacturing will instantly fix Apple’s issues, the case is not so clear.
“Apple is not known to abruptly drop prices and thus the saving could go towards building foundation for Apple’s retail and marketing footprint”.
“Apple though selectively offers discount only during festive season and that could be also 4-5 percent [price cuts] max and not the entire 12-13 percent [saving from local production] will be passed on to consumers.”
It is also speculated that Apple’s initial efforts “won’t be full-fledged manufacturing like in Taiwan or China” while some analysts estimates that no more than 400,000 units per quarter would be assembled initially, minimizing any potential impact.
Of course that’s the short-term prognosis, and if Apple is able to scale its India productions — and potentially advance the processes they carry out — then there’s scope for price savings to be passed on. For now, this is a promising development for Apple and its fans in India — but it is likely to be some time before the full impact is felt in the market.
In the fourth quarter, Apple ranked 10th in India’s smartphone market but led the premium segment with a 62 percent market share, Counterpoint said.
Samsung Electronics Co Ltd and a host of Chinese players including Xiaomi and Vivo dominate India’s smartphone market where the vast majority of phones sold are priced below 15,000 rupees ($225).
In comparison, the entry level iPhone SE model sells on Amazon.com’s India site for 28,433 rupees ($424).