© gionee Electronics Production | June 14, 2016

Apple needs manufacturing in India before it can open stores

Before Apple can open its store in India, it has to bring manufacturing facilities to the country.
India is seeking a commitment from the Cupertino company to establish manufacturing in the country before the government grants Apple's request to open its retail stores, reports Bloomberg citing an unnamed senior government official.

India has an existing policy which requires local sourcing for companies that want to open retail stores – something that the government might loosen is Apple can provide a timeframe for some domestic manufacturing, the official told Bloomberg.

India has is looking to become the fastest growing smartphone market in the world while sales are more or less slowing in the rest of the world. Gartner for instance, estimates that 139 million smartphones will be sold in India in 2016, growing 29.5% year over year. average selling prices of mobile phones in India remain under USD 70, and smartphones under USD 120 will continue to contribute around 50 percent of overall smartphone sales in 2016.

Currently Apple only ships around 2% of the phones in the country. Most of its models are priced beyond the reach of average citizens. Bloomberg states that more than 80% of the phones sold in India cost less than USD 150, compare that to Apple's cheapest model, the iPhone SE at USD 581.

Apple's manufacturing partner, EMS-giant Foxconn, has established phone assembly factories in the country where it assembles phones for Chinese Gionee and Xiaomi.

The country requires foreign companies to produce a minimum of 30% of their components locally if they want to sell via their own retail stores – with some exceptions, the report continues.

India requires companies to procure at least 30 percent of their components locally if they want to sell through their own retail stores, with some exceptions.

The EMS-giant has stated before that it is looking to establish a real presence in India by opening as many as 10-12 factories in the country by 2020.

The Finance and Commerce Ministries of India are negotiating regarding an adjustment of current policies which would allow Apple to make a revised application, even if the facilities aren't complete, the report continues.


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