After a series of drawbacks, it seems Apple Inc’s (NASDAQ: AAPL) ambition to expand in India is about to take a positive turn.
During the early part of the week, the government of India revealed its plans to ease key provisions of its policy centered on foreign direct investment by multinational corporations.
Specifically, the government of India intends to loosen the requirement that foreign firms trying to gain foothold in the Asian country source at least 30 percent of their raw materials from inside the country. The government will give a 3-year grace period before it will require single-brand retailers to adhere to the requirement. In addition, corporations found as selling “state of the art or cutting edge technology” may experience an extra 5-year window before they are required to comply to the strict 30 percent sourcing policy.
This latest announcement opens the door for the iPhone maker to apply to launch the first Apple-owned retail stores in the fastest-growing smartphone market in the world. According to retail consultant Devangshu Dutta, “The relaxed rules give Apple a window to build up a credible brand and give the company a chance to build up internal capability and familiarity with the supply base. … For branding, a certain consistency is critical and this can be done by having retail control.”
Until this moment, the Cupertino, California-based tech giant has been forced to team up with local retail firms and electronics chains for the distribution of its products. Apple Inc. feels that this has lowered the quality of customer experience that it values greatly.
With the smartphone shipments slowing, India is the only country with enough potential for growth and possibly move the needle for the iPhone maker.
With the revenue of Apple anticipated to contract during the present fiscal year, the corporation needs to access any and all potential opportunities for growth. With China and much of the global smartphone shipments becoming sluggish, India is probably the last major growth market for Apple Inc.
However, at the same time, India is not the most obvious option for the high priced mobile handsets for the tech giant. Approximately three-quarters of smartphones in the Asian country are sold for lower than $150. The per capita incomes in the country are around one-tenth of those in the US at constant rates.
Apple Inc. rolled out the iPhone SE earlier this 2016 as it aims that its new cheaper mobile device might bridge the gap to the expensive smartphones of Apple Inc.
Surely, a move by Apple to open its own retail stores in the country should aid in improving the iPhone maker’s presence in a market with exceptional long-term potential. At the same time though, breaking into the Asian country is unlikely to address the majority of the short-term issues that the tech giant is currently experiencing.
As of 10:24 AM GMT -4 on June 23, the shares of Apple Inc are changing hands at $95.89, up by 0.36 percent or 0.34. The tech corporation’s market capitalization currently stands at 523.26 billion and has a dividend yield of 2.38 percent.