Tim Cook explains why India could be the next China for Apple

Apple's game plan is to turn India into the next China, not only in terms of sales but also manufacturing and exports

Apple is accelerating investments in India, based on the bullishness that the Indian market will drive its volumes, even though growth in sales of the company’s flagship iPhone is slowing in a major way globally.

In the last quarter, Apple’s iOS app accelerator, as well as its manufacturing unit run by contract manufacturer Wistron in Bengaluru, went online.
 

These investments are in addition to the company’s overall spending in growing its sales channel and marketing.

“We began to produce the iPhone SE there (India) during the quarter, and we’re really happy with how that’s going. And so we're bringing all of our energies to bear there. I see a lot of similarities to where China was several years ago,” said Tim Cook, chief executive officer of Apple, in a call with investors on Tuesday.

Apple’s game plan is to turn India into the next China, not only in sales but also manufacturing and exports.

The company has been talking to the Central government on sops for setting up a full-fledged manufacturing unit for more than a year now. However, progress has been slow due to India’s unwillingness to grant subsidies just to Apple and the government is looking at a policy that can attract all smartphone makers to manufacture their devices here.

While sales of the iPhone have been growing at a blistering pace in India, analysts point out that the growth Apple is seeing is nothing out of the ordinary.

With a base of just 2-3 per cent of India’s smartphone market, Apple still has a long way to go here, especially in convincing Indians to buy its latest iPhone each year.

However, everyone seems to agree with Cook’s reading that the Indian market will provide significant opportunity for Apple to sell millions of its high-end devices here. While India’s GDP might not rival that of China’s even a decade from now, Cook in the past has said that the metric is “not critical for us to have a great success there”.

Apple has for long maintained that as network infrastructure in India gets better, more customers will begin to see the benefits of owning an iPhone. This, combined with an extremely young population that is aspirational by nature and has higher incomes, is what could turn India into Apple’s next China.