Apple signals iPhone push in India as Tim Cook opens first store

Tim Cook opened the first Apple Store in India on Tuesday, as the iPhone maker stepped up its battle with Samsung over the growing luxury smartphone market in Asia’s second-biggest economy.

The chief executive’s visit to the financial capital, Mumbai, for the launch of its flagship consumer store comes with Apple on a manufacturing drive in a country that is positioning itself to grab a bigger share of western tech production from China.

India will also overtake China as the world’s most populous country this year, but Apple’s share of the world’s third-largest smartphone market is small — at just under 5 per cent of handsets sold last year.

However, its share has grown rapidly by value as it challenges Samsung in the expensive premium phone segment. Apple had 18 per cent market share by value last year, second only to Samsung with 22 per cent, according to market monitor Counterpoint Research.

Several hundred people queued to see Cook push open the glass doors of the new store on Tuesday morning and a drum band played as Apple employees danced inside. A small boy wore a T-shirt which read: “Future Apple CEO”. One teenager had painted Cook’s portrait and was hoping the world famous chief executive would sign it.

“It’s India’s first Apple Store!” said Shijo, 31, who flew all the way from the southern state of Kerala for the opening. “Today’s a big day, it’s coming true, I’m so excited to come and see it personally.”

For the past six years, Shijo has worked at an Apple authorised service centre, which fixes Apple devices. He lists the Apple products he owns himself — only an Apple TV is missing. Shijo says credit card payment plans mean he can afford these expensive items.

For Apple in India “it’s absolutely a story in progress only, there’s no denying that”, said Prabhu Ram, head of the industry intelligence group at CyberMedia Research. “They have been making strides, the year-on-year growth has been fantastic. But just three to four years back they were just 1 per cent of the market.”

Ram estimates Apple’s share will reach around 6 per cent this year, with the company selling up to 8mn iPhones. Its iPhone 13 was India’s top selling model in 2022, according to Counterpoint, which considers phones costing above Rs30,000 ($365) as premium models.

“Within that premium segment, which is a very small niche but growing like anything, that is where they will see volume going up,” said Ram, adding that while online sales had boosted Apple so far in India, the physical stores would help reach new customers. The growth of “buy now, pay later” and credit card instalment payments were also fuelling expensive phone purchases, analysts said.

“Apple has always been an aspirational brand, it’s just the pricing was not in the Indian consumers’ appetite,” said Prachir Singh, analyst at Counterpoint Research, adding that Apple would be able to offer more discounts now it was producing phones in India, thereby avoiding a 20 per cent customs duty.

US tech companies have been attracted to India by its 1.4bn population, with an estimated 66mn to 100mn in the middle classes, according to the Pew Research Centre. Success is far from assured, though, with Netflix having struggled to find the right price in India’s cut-throat competitive streaming market and Amazon becoming embroiled in a long-running tussle with Reliance Industries over a bankrupt retail chain.

The most successful foreign companies have forged ties with India’s most powerful corporates and Cook met separately Reliance Industries chair Mukesh Ambani and Tata Group chair N. Chandrasekaran on Monday, people briefed on the meetings said.

Reliance and Tata, sprawling Indian conglomerates with retail to power units, are likely to be vital to Apple’s growth in India. Apple’s 20,000 sq ft new store is in a Reliance-owned high-end shopping mall, and Reliance owns India’s biggest mobile network by subscribers, Jio. Meanwhile, Tata is supplying Apple with components and its Croma electronics stores sell Apple products. A second Apple Store is set to open in New Delhi on Thursday.

“The role of Indian conglomerates will be quite huge in Apple’s overall growth in India,” said Singh.

While India is not yet a major consumer market for Apple’s devices, it is growing in importance as an alternative Asian manufacturing location, alongside Vietnam, as the Cupertino-based company looks to diversify its supply chain away from overwhelming reliance on China.

Indian central and local government officials are easing requirements and pledging generous financial incentives to try to get Apple, its rival Samsung, and other electronics manufacturers to invest in new plants.

India exported more than $10bn worth of mobile phones from all brands in the fiscal year that ended on March 31, and industry officials say the sector employs about 750,000 people directly and indirectly.