Can Apple stores succeed in India?

Apple recently applied to open its own stores in India, suggesting it plans to enter a market it previously neglected. 

After years of selling its products through third parties in India, Apple could finally be setting up shop in the rapidly growing technology market.

The move signals renewed interest in a rising middle class market that Apple has, until now, chosen to ignore, even as sales in China slow. It may also be indicative of India easing restrictions on foreign investment, at least in the technology sector.

According to a report by India’s The Economic Times, Apple India recently applied to begin rolling out its own Apple branded stores in the south Asian republic for the first time. 

“We have just received Apple's proposal. We are examining it,” India’s Department of Industrial Policy and Promotion Secretary Amitabh Kant told the Times.

Apple also confirmed the filing to Reuters.

While Apple’s iPhones and other products are currently sold through private vendors in India, Apple itself has next to no presence in the country and other, less expensive brands dominate there. According to the International Data Corporation (IDC)’s quarterly report, Apple smartphones have a minimal share in India’s market, trailing far behind leaders Samsung, Micromax, Intex, and others. And according to Statista, Apple’s iOS products hold less than 2 percent of India’s market share, while Android commands more than 60 percent.

“There was practically no interest from Apple in India,” Arvind Singhal, chairman of the management consulting firm Technopak, told Forbes. “Even the product pricing in India was ridiculously high and Apple customers in India were getting their products from overseas and the company didn’t care.”

Even so, Apple’s following in India has steadily increased over the past few years while its growth in the US and China has slowed. Apple sold more than $1 billion worth of products in India for the first time last year, according to the Times.

The Times also reported last September that in a visit to Silicon Valley, Indian Prime Minister Narendra Modi invited Apple to begin manufacturing in the country. Additionally, India loosened its foreign direct investment policy last November to “further ease, rationalise and simplify the process of foreign investments in the country,” according to a government statement.

India’s previous regulations stipulated that any outside company investing in more than 50 percent of a brand must secure 30 percent of its product locally in India, a rule Apple sought to ease before the changes were announced. The new government position allows such easing, pending official approval, in regards to certain technology companies such as Apple.

Apple’s push to open stores in India, along with its recent growth and increase in advertising, comes as the tech giant hopes to penetrate the smartphone market projected to overtake the US in sales next year, according to Strategy Analytics. Overall smartphone sales in India are expected to rise by 17 percent in 2017. Meanwhile, US and Chinese sales are predicted to increase by only 1 percent and 2 percent, respectively.

Apple’s application very likely signals the company’s desire to add to its more than 450 retail locations worldwide. In China, where Apple’s popularity has been cemented since its launch there, one new store opens nearly every month, according to Apple's Chief Financial Officer Luca Maestri. The physical presence of Apple’s distinctive showrooms in India could increase recognition and popularity in the market there.

“That experience has been missing in India,” said Mr. Singhal to Forbes. “When Apple says it’ll open its own stores, it means it’s serious about India.”