Apple India: Can New Stores Help Tech Giant Win In The Country?

More than 20 years after Apple products entered Indian markets, the tech giant is finally set to open its first stores in the country.

The two stores - in capital Delhi and India's financial hub Mumbai - will be inaugurated later this month. Bloomberg has reported that Apple chief Tim Cook is likely to visit India next week for the occasion.

The unique, colourful design of the Mumbai store - inspired by the black-and-yellow taxis that zip through the city - and hype around the launch have stirred excitement in many Indians. The iPhone is still an aspirational product in the price-sensitive Indian market - more than 95% of smartphones run on Google's Android platform.

Until now, Indians could buy Apple products in the country either online or through a vast network of what the company calls "premium resellers". So there has been some speculation about whether the ability to sell products directly to customers in India - the world's second largest smartphone market - will impact its fortunes here.

It also comes at a time when India is rising fast as a manufacturing base for the iPhone.

But some experts say that even though the new stores will be important branding tools, they would have little impact on Apple's market share in India.

"The whole idea of opening an Apple store is to showcase the range of products available in the Apple ecosystem. But most of these products are too high end for a country like India where a bulk of the market is not in the premium segment," says Prasanto K Roy, who has worked extensively on issues of technology and public policy.

Apple has long tried to open physical retail stores in India - its original plans for 2021 were derailed because of the Covid-19 pandemic.

For years, the company had asked the Indian government to loosen rules that required foreign-owned single-brand retailers to obtain 30% of the value of products sold in India from suppliers in the country. Apple had argued the figure was unrealistic - at least in the short term - as it virtually made all its devices in China.

In 2019, the Indian government relaxed some investment rules, exempting companies selling "cutting-edge" items, such as Apple's iPhones and iPads, from the requirement. The next year, announcing Apple's plans to open a physical store in India, Mr Cook had said the company had been waiting for approval from the Indian government "to go in there ourselves" rather than with a domestic partner. "I don't want somebody else to run the brand for us," he told shareholders.

The next year, Apple launched an online store in India. The website, which allows users to ask for customised products, got a "great reaction", according to the company.

Mr Roy says that Apple's decision to open physical stores in India could be the next step in its branding strategy. "It's not as if this will change Apple sales in any dramatic way," he adds, "but it is still a key milestone, one that will allow Apple to deliver to Indian customers the full Apple experience".

Spacious, carefully curated and full of artful displays and clever designs, these stores are projected as the physical embodiment of the Apple brand itself. "The excitement to visit these stores is an experience of its own," Mr Roy says.

He adds that setting up an Apple store in India is also a statement that the country is "now big enough for Apple to be actually interested in expanding operations here" in more than one way.

Apple first began making a lower-end model of the iPhone in India in 2017 in the southern state of Tamil Nadu. Last year it began producing its latest model of iPhone 14 in the country, which now accounts for 5% of total iPhone production.

For years, Apple had relied on China's sophisticated manufacturing network to produce the bulk of its products. But its dependence on the country was strained after Beijing announced its "zero-Covid" policy, leading to months of industrial lockouts and massive supply chain disruptions.

"India's Holy Grail would be to get a big iconic brand like Apple to move from China to India. And it has done it with Apple," Mr Roy says.

Analysts predict that by 2025, a quarter of all iPhones the company makes could be produced in India. In January, federal commerce minister Piyush Goyal also said that Apple was already making between 5-7% of its products in India and that "they are targeting to go up to 25% of their manufacturing".

Navkendar Singh, a technology analyst at research firm International Data Corporation (IDC), says that the timing of the launch also bodes well for the company because the premium market in India is growing.

Apple had a 60% market share in the Indian "premium smartphone" market - which refers to mobiles that cost 40,000 rupees (£451; $558) or more - in India in 2022, ahead of Samsung's 21% share, according to IDC data.

"Apple is doing well across categories. When you launch an Apple store you're basically giving a premium experience to your premium consumers. It might not pull up sales but it definitely pulls more people into the Apple ecosystem."

Besides, Mr Singh adds, Apple can absorb losses even if the store doesn't start making money in the first year.

"The real challenge will be to pull away consumers from retail stores to these flagship centres without alienating the partner sellers," he says.

"Otherwise it's a good story. They finally understood that India's premium market is growing, so why not be serious about it."

BBC News India is now on YouTube. Click here to subscribe and watch our documentaries, explainers and features.