Apple appears close to getting the regulatory green light to open its first retail stores in India.
The company is expected to win approval from the Indian government to launch the stores, the Bloomberg news service reported Sunday, citing “a person with knowledge of the matter.”
Apple did not immediately respond to a request for comment on the Bloomberg story.
Normally, India requires that any foreign business selling a single brand in the country buy all its components from local manufacturers, something that would be an obstacle for Apple, which gets most of its parts from Chinese vendors. That requirement has reportedly been waved since Apple has been classified as a “provider of cutting-edge technology,” the source told Bloomberg.
Apple already sells the iPhone, iPad and other products in India both online and through resellers. But its market share there is only about 2 percent. Retail stores could boost sales by giving customers in India a chance to put their hands on the company’s devices and to speak in person with customer service employees.
Opening retail outlets in India represents both an opportunity and challenge for Apple. Hit by weaker iPhone sales growth in established markets, Apple needs to push the phone in other regions. India is one of the fastest-growing smartphone markets in the world. But it’s also a market that likes budget-friendly phones, including those made by top vendor Samsung. Apple’s iPhone is a premium-priced product.
So how might Apple lure customers to buy the iPhone at its new stores? Deep discounts, one analyst told Bloomberg. The company will likely continue to offer heavy discounts on older models, such as the iPhone 5S, Tarun Pathak, a senior analyst at Counterpoint Technology Market Research, said in the report.
Appealing to new users will also be key to growing Apple’s market share in India, which is only around 2 percent.
“Most of the growth in India will come from new users coming into the Apple ecosystem, unlike in the West where growth is mainly from existing users upgrading,” Pathak said. “You can expect the stores to focus mostly on iPhones.”
The Wall Street Journal reported in January that Apple had requested approval from the Indian government to open retail stores in the country.
During a call with analysts in late January to discuss last quarter’s earnings, CEO Tim Cook highlighted India as a rapidly expanding country and the third-largest smartphone market in the world, behind China and the United States. Cook cited India as a growth market due to its young population, great demographics for a consumer brand and good business environment. He added that Apple has “been putting increasingly more energy in India.”
Apple Stores have been an important factor in the company’s success. The company now has 463 retail stores across 16 countries. Apple Stores had the highest sales per square foot of any retailer in the US, Fortune reported last year.