Prime Minister Narendra Modi is likely to make a strong pitch for Apple Inc. to manufacture its devices in India at his meeting with Apple’s CEO, Tim Cook, on Saturday, Ravi Shankar Prasad, Minister of Communications and IT, Govt. of India hinted.
“Since Tim Cook has said that Apple’s commitment to India is for the next thousand years, I take this opportunity to welcome the CEO of Apple. We need to work together for growth, investment and manufacturing,” Ravi Shankar Prasad, minister for communications and information technology, said at an Assocham event on Friday.
Cook, on his part, maintained that his intention behind meeting the Prime Minister is to understand the infrastructure and role of 4G in India, and to see if Apple can exploit the opportunities that the country has to offer.
“I think that is really critical for the progress of the country, really also critical in bringing out the life of the iPhone and doing things you couldn’t do before,” Cook told NDTV news channel in an interview.
While Apple has applied for opening retail stores in India, which is currently being reviewed by the government, Cook said the company has decided to take a holistic view of India even as sales in China have dipped.
“We’re looking at what we can do here. We’re definitely thinking about it (making in India),” he said in the interview.
India, with a middle-class population that is expected to reach 200 million by 2020, could be the next big market for Apple products.
The government is trying to attract foreign investment and boost the manufacturing sector through its “Make in India” initiative that has already drawn several handset makers.
The challenge for Apple in India is that its products are expensive and India is a market where most phones are bought outright and not subsidized by telecom services providers.
In fact, Apple does not feature in the top 10 in terms of smartphone market share in the country, according to Bloomberg Intelligence analyst Simon Chan.
Yet, the company touched $1 billion (around Rs.6,740 crore today) in revenue in India in the fiscal year ended 31 March 2015—it did Rs.4,500 crore in revenue the previous year.
India’s smartphone market has nearly grown threefold from 100 million units in 2014-15 to 270 million at the end of 2015-16, with Prasad predicting that it will touch 500 million in the next two-three years.
“Digital India is going to be a $1 trillion economy in next five years; $400 billion will be generated from electronics manufacturing,” said Prasad.
A consultant who spoke on condition of anonymity said Apple may look at manufacturing in India, especially since Foxconn—which manufactures gadgets for the world’s leading electronic brands including Apple, Huawei, Xiaomi, BlackBerry and Motorola—has pledged to invest up to $5 billion in India.
“Another point can be that Reliance Jio is launching its 4G services using VoLTE (voice over LTE) technology and India doesn’t have a well-equipped ecosystem in terms of handsets that support it. So, it will be beneficial for Jio if Apple looks for manufacturing opportunities in India,” the consultant added.
According to Kunal Vora, associate director at Mumbai-based BNP Paribas Securities India, the business prospects in India may persuade Apple to consider manufacturing in the country. “It’s difficult to indicate on what level,” he added.
According to a person familiar with the matter who did not want to be named, Mittal’s son Kavin made a presentation on the company’s Hike messenger app, a cross-platform instant messaging service for smartphones that uses the Internet for communication.
The person said Airtel and Apple share a relationship that dates back to 2007, when the American company introduced its product in India through Airtel.
“Given Airtel’s lead in 4G and its market position, this relationship is only going to grow stronger,” the person said.
In the NDTV interview, Cook said that his discussions with telecom operators revolved around the roll-out of 4G services and selling Apple products.