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Tech
News18 » Tech
3-min read

Drastic Gain in Market Share May not be Apple’s Main Target in New FDI Ruling

Despite the enthusiasm around the relaxed foreign direct investment norms for single-brand retail, Apple will likely focus on exports and unique store experiences in future.

Shouvik Das | News18.com@distantvicinity

Updated:August 29, 2019, 9:56 PM IST
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Representative image. (Photo: News18.com)
Representative image. (Photo: News18.com)
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The Indian smartphone industry has remained somewhat elusive for Apple. While the market has evolved over time, value and pricing still play prime roles in consumers’ buying decisions. Given that Android already plays a dominant role, Apple’s biggest gain from the new foreign direct investment (FDI) norms laid out yesterday by the Indian government will likely not be its market share in India. On the contrary, Apple is more likely to focus on two factors as and when it takes advantage of the new rules — exporting, and unique in-store experiences.

Speaking to News18, Navkendar Singh, research director at IDC India, said, "Apple is known globally as a retail champion in terms of experience, and the kind of marquee, landmark stores that they have in major cities. It’s not exactly about Apple gaining market share (in India)." He further added, "Apple is known for their in-store experience, providing evening classes and tutorials in music, photography and so on. Knowing Apple, they will likely bring in artists to ramp up the experience, since their retail spaces will be massive and nicely designed. This will help them further polish the halo around the brand that they have always had. This is important, since right now, the retail experience around buying an iPhone is really poor."

Singh, however, agrees that this will only become a factor as and when Apple decides to look at India as a focus market. Until then, their biggest benefit will be to take advantage of the relaxed local sourcing norms, which would allow them to use their Indian setup as an export hub. Singh says, "The addition of national and export contracts under local sourcing will really help brands like Apple. Given Apple’s share is small in India, they need to think twice before committing resources to India, in terms of how much can be absorbed by the country. But now, even if they do not find a market in India, they can still opt for exports, which is a big boon."

Stating that it is unlikely for Apple to suddenly find a big base of buyers in the country, Singh said, "I don’t expect Apple to suddenly find a big market here, which is why they might decide to have an expanded manufacturing setup. This will give them a viable alternative to manufacturing away from China, which looks like it is important for every brand."

Singh’s point of view is corroborated by Hanish Bhatia, senior analyst of devices for Counterpoint Research. He said, "Under new rules, the entire sourcing from India for global operations shall be considered towards local sourcing requirement. This sourcing can be done directly by the entity undertaking SBRT (single-brand retail trade), or its group companies, or indirectly through a third party under a legally tenable agreement. Apple already has a strong association with EMS (electronic manufacturing services) firms in India for assembly of previous generation iPhones. Relaxation in local sourcing can open a window to bring manufacturing of new iPhones in short term."

Bhatia also agrees that the opening of Apple Stores will play a key role for the brand only when it decides to invest larger amounts in the country, which is imperative to set up such stores. The same applies not only for Apple, but for other brands as well. For instance, the likes of Oppo and Vivo, which have been quite aggressive in their India efforts, can emulate a model similar to their multi-floor flagship stores in Shenzhen and Beijing, in order to create a bigger impact over their online-focused marketing initiatives.

However, unlike Apple, the other brands are already vying for a larger share of the Indian smartphone market — a pie that Apple might not be too frantic to eat into.

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