Apple has long said that India is the next growth frontier for the company after China. Apple has been selling its products in India for a while now albeit through third party vendors and joint ventures with the likes of Reddington, Ingram Micro and others.
Come January 25, Apple brass is set to meet with Indian government officials to discuss plans to set up manufacturing in India. Chatter is that Apple has scoped out locations in Bangalore to set up its first assembly plant if everything moves smoothly with the Indian government.
Apple has been in discussions with Indian officials for a while now and will now specifically ask for concessions, in order to manufacture and assemble its devices locally in India, from the government next week.
The company is reportedly asking for a 15-year exemption from customs duties and labelling norms in order to agree to set up manufacturing in India. The company is also expected to ask for duty concessions on components that can then be reassembled at the local Indian manufacturing facility.
In addition, Apple believes that it is better off sourcing components outside of India and will ask the officials to waive the 30% local sourcing requirement.
Last year, the Indian government refused Apple's request to sell refurbished or used phones in the country. Rightly so, in my opinion. India is not a dumping ground for anyone.
India is a critical market for Apple going forward. If the company is able to convince the government that the benefits of allowing these concessions outweigh the perceived negatives, it could be the start of a new high growth sales channel for Apple in India, with one of the youngest populations per capita in the world that will be lined up clamoring for Apple products down the road.
The singular obstacle is whether the Indian government will choose to make changes in its procedures and requirements just for one world-class brand? Does India make concessions to Apple now and thus make it easier for others down the road? Or does it chose to continue along the quasi-protectionist (slow to open market reforms) path it has chosen for so many decades?
My personal take is that they should agree to Apple's requests and thus usher in other brands down the road along the same path in the future, all to the ultimate benefit of the Indian consumer. It would be a win-win for Apple, the Indian consumer, the Indian government and go a long way in establishing an open market in India.
However whether the Indian government chooses to see it that way remains to be seen. We will find out in less than a couple of weeks.
Most importantly, we will also find out how serious the Indian government is about its "Make in India" initiatives.
(Long aapl, long and short options)
