Friday, 3 June 2016

The Reason Why Apple Can't Open A Store In India


It may be one of the world's largest and most iconic brands, but Apple has yet been unable to persuade the Indian government to allow the building of a single Apple Retail Store.

Photo: @tim_cook
Recently, Apple CEO Tim Cook made a much-publicised visit to India, mingling with Bollywood stars, visiting a Hindu temple and generally experiencing what the second most populated country in the world has to offer. But this wasn't a holiday- following Apple's success in China, Cook has turned his sights to India, a country whose economy has boomed in a similar fashion over recent decades. No doubt, business was firmly in the Apple CEO's mind throughout the trip, as he met with key players in India's technology market as well as the nation's Prime Minister.

One of the issues believed widely to be at the forefront of discussions is that of Apple Stores in India. Looking at the massive boom in consumerism in India over recent decades, it seems unbelievable, but there remains no official Apple Store built in the country. Yes, there are 'premium resellers' located across India, local franchise-style businesses authorised to sell Apple products, but these lack typical features of Apple Stores, such as a Genius bar for technical support. There is no official, Jony Ive-designed Apple Store anywhere in India.

The situation is all due to the interesting government policies regarding the activities of foreign businesses in India. The headline policy preventing Apple here is the one requiring at least 30% of all products sold in foreign retail stores in India to be sourced locally. This is part of the 'Make in India' initiative designed to encourage foreign investment in Indian manufacturing, on top of input in the local goods market.

Currently, the large majority of Apple's products are made in China, the USA and Brazil, and even if Apple* does begin to manufacture products in India as recent talks were also rumoured to be about, it is highly unlikely that it could produce 30% of the ware it sells in its stores locally by 2017 as it hopes.

So Apple must either play the long game and ramp up production in India over the next 5-10 years to conform to the rule, or it must seek an exception. This will prove an interesting test of Modi's government's commitment to his 'Make in India' policy. Apple being such a massively influencial global company, the country could see a substantial, immediate economic boost if it lets Apple bypass the policy.

However, of course this is a sign that there is room for compromise, and it may provoke other multinational corporations to seek exceptions too. Furthermore, the government could make use of Apple's desperation to open stores in India to its advantage, if they demand that jobs and other sustainable sources of growth (such as factories) can be contributed by Apple in return.

From Apple's perspective, it is time to grab the Lurpak and begin to butter up the Indian government. Modi is highly unlikely to allow stores to be opened without any contributions made elsewhere at all, but if any company is to receive a little leeway in this matter, Apple is highly likely to be it.

* Apple does not technically manufacture its products, this is outsourced to dedicated manufacturing firms such as Foxconn.
Mohammad Lone Editor