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Among countries with Apple Stores, India has lowest per capita income

India's per capita income of $7,130 is less than half of Brazil's $15,600, which ranks second lowest on the list of nations with Apple Stores


Photo: Kamlesh Pednekar

BS Web Team New Delhi

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While India got its first Apple Store amid much fanfare, the country's per capita income is still struggling.

According to recent World Bank data, India is the lowest among the 26 countries that have the tech giant's physical store presence.

India's per capita income (in purchasing power parity or PPP figures) of $7,130 is less than half of Brazil's $15,600, which ranks second lowest on the list of nations with Apple Stores, the data said.

When it comes to per capita GDP, India comes in at $7,242, whereas Brazil is more than double that at $16,031, it added.

"In essence, this shows that the income distribution in India is very skewed. Although the per capita GDP may be very low, the number of people with the purchasing power to buy Apple products is very high," Pronab Sen, a former chief statistician of the Indian government, told Moneycontrol.

India got its first Apple Stores, one in financial hub Mumbai and one in national capital Delhi, ahead of other emerging economies with higher per capita incomes like Malaysia ($28,150), South Africa ($14,340), Indonesia ($12,680), Vietnam ($11,080), the Philippines ($9,210), and others.

"For young Indians, the Apple iPhone is a status symbol. You might be working at a McDonald’s or studying at a college, but you still want to buy an iPhone as it lends you a lot of social capital. Mind you, this cohort usually buys the models that are two generations behind as those are cheaper," said Neil Shah, vice president at market research firm Counterpoint.

To capitalise on the brand's aspirational pull, Apple is expected to have shipped 6.7 million iPhones to the country in 2022, up from 4.8 million in 2021 and 2.2 million in 2020.

The company has also partnered with banks and e-commerce portals to meet the demand for its products among low-earning youngsters by providing credit in small, equal monthly instalments.

Meanwhile, Apple's clout in the Indian market is being enhanced by two key factors. The first is a demographic that is gradually migrating towards higher-end phone brands. People are willing to spend money on a premium device because they spend so much time on their telephones, both for business and for leisure activities such as watching short films, web series, playing online games, and engaging in social media.

As a result, Counterpoint estimates that the premium category of smartphones in India — devices costing more than Rs 30,000 — is rising at an 11 per cent annual rate. Apple leads the field in this category, with phones priced over Rs 45,000, accounting for more than a third of the 17 million premium smartphones supplied in the country last year. (A shipment is a dispatch to a retailer, not a sale to the end-user).

The second benefit for Apple in the country is that both the central and state governments are rolling out the red carpet to attract high-tech manufacturers. If the Centre is offering 4-6 per cent subsidies to companies that establish manufacturing facilities for smartphones and electronics components, states compete by offering incentives on power consumption by manufacturers, lower taxes, interest subsidies, or even easing labour laws.

These developments come at a time when Apple is betting on India to become a key global manufacturing hub as the company looks to diversify its manufacturing capabilities beyond China amid rising US-China tensions.

The company currently manufactures iPhones in India, including the latest iPhone 14, through contract manufacturers such as Foxconn, Wistron, and Pegatron, with plans to expand into other products such as its wireless headphones, AirPods.

The Cupertino-based tech giant exported about $5–5.5 billion worth of iPhones from India in FY23, accounting for nearly half of the country's mobile phone exports,  according to industry estimates.

Interestingly, China’s per capita income was $7,630 in PPP terms in 2008, the year Apple set up its first retail store in the country.

Experts believe that the fact that India now has a comparable per capita income level and is one of the fastest-growing large economies despite the global slowdown makes it an appealing market for global consumer brands to bet big on at this time.

There is also cause for concern for smartphone manufacturers such as Apple and Samsung in South Korea. It's not only that the total Indian smartphone market stayed unchanged in terms of revenue in 2022 or that shipments fell 9 per cent. It was most likely a blip year since consumers were anticipating the debut of 5G services and the release of compatible phone models, said analysts.

This factor was also evident in the festive sales of e-commerce giants such as Amazon and Flipkart between September and November last year. Despite the fact that mobile phones continued to account for the majority of sales over the season, the category rose by only 7 per cent YOY.

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First Published: Apr 20 2023 | 6:44 PM IST

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