New Delhi - Apple is on course to win clearance to open its first retail stores in India, a person with knowledge of the matter said, as chief executive officer Tim Cook seeks growth opportunities in a nation of 1.3 billion people.
The Indian government plans to push through Apple’s application to set up outlets, the person said, asking not to be identified as the information isn’t public. The company is re-submitting the request as it wasn’t in the right format, the person said, without giving a time-frame for final approval.
Apple should qualify as a provider of cutting-edge technology, the person said. That would exempt the maker of iPhones and iPads from a rule forcing foreign businesses that retail a single brand in India to procure 30% of a product’s inputs locally. The company makes most of its devices in China.
Cook is hunting for fresh sources of growth after Apple last month forecast a sales decline for the first time in more than a decade. India now has the world’s fastest-growing major economy and about 220 million smartphone users. The challenge is that Indian consumers tend to prefer cheaper devices, leaving Apple with only about 2% of the market.
"Most of the growth in India will come from new users coming into the Apple ecosystem, unlike in the West where growth is mainly from existing users upgrading," said Tarun Pathak, a senior analyst at Counterpoint Technology Market Research, based near New Delhi.
“You can expect the stores to focus mostly on iPhones.”
The company will likely continue a policy of major discounting on older models - such as the iPhone 5s - to bring more new users into the fold, Pathak said. Chinese volumes are 15 times that of India, signaling room to grow, he added.
Apple uses re-sellers in India for its products. Domestic distributor Redington India Ltd. has dropped about 5 percent since Apple in January confirmed it had applied to open stores in Asia’s third-largest economy.