Why India Is Still a Difficult Market for Apple


Sep. 13 2016, Updated 11:04 a.m. ET

iPhone will be $200 more expensive in India

Apple (AAPL) has been unable to successfully penetrate the Indian market, as it has a 2% share in the country’s smartphone market. India is one of the largest smartphone markets in the world, and Apple is keen to improve its market position in the country.

The starting price for the iPhone 7 is $649. However, when the iPhone 7 arrives in India, it will be at least $200 more expensive compared to the prices in the US.

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Apple will start selling the iPhone 7 in India for 60,000 rupees (or $900) in October 2016. This is significantly (35%) higher compared to prices in the US, as it is driven by a sales tax imposed by the Indian government. Apple is also dependent on third-party companies to sell its products in India (INDA), thereby reducing its profit margins and resulting in increased prices.

The iPhone 5s sells for $300 in India, which is higher than the average smartphone price of $150–$200.

iPhone sales rise significantly in the last two fiscal quarters

As seen above, iPhone sales rose over 50% year-over-year in India (EPI) for the last two fiscal quarters. However, Apple faces stiff competition from Samsung (SSNLF), Lenovo (LNVGY), and other domestic players such as Intex and Micromax in the Indian market.

In June 2016, India announced the relaxation of local sourcing rules for Apple. Apple can now open its own retail stores in India, which will boost its brand value in the country. Apple needed this, as its share in the Indian smartphone market is still less than 3%.


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