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Import tariffs are a big reason why Apple’s market share in India is abysmally low. The products cost a lot more while affordability and income are also relativ

by wtmt 7y ago

Import tariffs are a big reason why Apple’s market share in India is abysmally low. The products cost a lot more while affordability and income are also relatively lower (on average) compared to other countries. iPhone assembly in India started a few years ago, with Wistron and more recently, Foxconn, setting up facilities. So far these two assemble only the older models, and the volumes may not be very high. But they will accelerate the pace since Apple cannot have local stores, due to regulations, unless it sources at least 30% locally. It’s been trying to negotiate better terms with the government, but hasn’t seen much success since many other smartphone makers have facilities here (the government once said it would not provide preferential treatment to anyone). Next year (2020) or 2021 may be the year when flagship iPhones are assembled in India, even if volumes are lower.

igravious 7y ago
Interesting info, thanks. Never heard of Wistron before. The 30% rule seems like a reasonable bar in order to foster local growth, do you think? High import tariffs I'm not so sure about. Some might argue it's protectionist but I think there's nothing wrong with protecting parts of your economy that are weak. See: “How Rich Countries Got Rich and Why Poor Countries Stay Poor” by Erik S Reinert https://www.amazon.com/How-Rich-Countries-Poor-Stay/dp/1845298748 https://www.amazon.com/How-Rich-Countries-Poor-Stay/dp/18452... As India becomes wealthier and if Apple can move production of all of their models there relatively soon that should set them up nicely to capture a larger chunk of that market.
- wtmt 7y ago
  The 30% local sourcing rule is just one aspect to encourage local manufacturing, employment and capacity building for companies that want to start their own "single brand" stores. I personally don't think that will help a lot, though it does add pressure on some companies like Apple, now that it has realized after a long time that India's market ought to be tapped after the slowdown in China and near saturation elsewhere (Apple did not focus on India for a very, very long time, and the country barely got any attention — Apple's services are also extremely poor in India. Apple Maps is far, far behind Google Maps, and Siri doesn't recognize Indian accents well). India should have encouraged manufacturing and assembly of semiconductors and electronics a long time ago, but successive governments didn't do much about it with urgency. The infrastructure for this is quite weak (especially in comparison to China and Taiwan). Add to this issues with electricity (there are periodic power cuts in most cities) and other infrastructure issues, it's more difficult for companies to get things done. That's where companies like Foxconn, which have had a presence in India to assemble computers and other accessories, have an advantage in ramping up. After crude oil imports, the import of electronic goods stands second (or sometimes third, after gold) in terms of foreign exchange outgo and the current account deficit. This is a huge problem for the government. In the last two decades, India has achieved a lot, mainly through the private sector, on mobile phone usage penetration, and India has the lowest (or one of the lowest) cellular plan pricing in the world. But it still lags on other related fronts, like great devices to take full advantage of the network and the Internet while remaining secure. High import tariffs on these products make them inaccessible to most people, and they have to make do with cheaper and inferior products. So I personally don't support high tariffs on products that can accelerate the way people connect and what they can achieve.
  - igravious 7y ago
    Thanks for taking the time to share that.

by wtmt 7y ago

igravious 7y ago

Interesting info, thanks. Never heard of Wistron before. The 30% rule seems like a reasonable bar in order to foster local growth, do you think? High import tariffs I'm not so sure about. Some might argue it's protectionist but I think there's nothing wrong with protecting parts of your economy that are weak. See: “How Rich Countries Got Rich and Why Poor Countries Stay Poor” by Erik S Reinert https://www.amazon.com/How-Rich-Countries-Poor-Stay/dp/1845298748 https://www.amazon.com/How-Rich-Countries-Poor-Stay/dp/18452... As India becomes wealthier and if Apple can move production of all of their models there relatively soon that should set them up nicely to capture a larger chunk of that market.

wtmt 7y ago
The 30% local sourcing rule is just one aspect to encourage local manufacturing, employment and capacity building for companies that want to start their own "single brand" stores. I personally don't think that will help a lot, though it does add pressure on some companies like Apple, now that it has realized after a long time that India's market ought to be tapped after the slowdown in China and near saturation elsewhere (Apple did not focus on India for a very, very long time, and the country barely got any attention — Apple's services are also extremely poor in India. Apple Maps is far, far behind Google Maps, and Siri doesn't recognize Indian accents well). India should have encouraged manufacturing and assembly of semiconductors and electronics a long time ago, but successive governments didn't do much about it with urgency. The infrastructure for this is quite weak (especially in comparison to China and Taiwan). Add to this issues with electricity (there are periodic power cuts in most cities) and other infrastructure issues, it's more difficult for companies to get things done. That's where companies like Foxconn, which have had a presence in India to assemble computers and other accessories, have an advantage in ramping up. After crude oil imports, the import of electronic goods stands second (or sometimes third, after gold) in terms of foreign exchange outgo and the current account deficit. This is a huge problem for the government. In the last two decades, India has achieved a lot, mainly through the private sector, on mobile phone usage penetration, and India has the lowest (or one of the lowest) cellular plan pricing in the world. But it still lags on other related fronts, like great devices to take full advantage of the network and the Internet while remaining secure. High import tariffs on these products make them inaccessible to most people, and they have to make do with cheaper and inferior products. So I personally don't support high tariffs on products that can accelerate the way people connect and what they can achieve.
- igravious 7y ago
  Thanks for taking the time to share that.