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Lots of back and forth.
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Apple is convincing more Indians to buy iPhones but has yet to win over the government

Ananya Bhattacharya
By Ananya Bhattacharya

Tech reporter

The Indian government is showing Apple who’s boss.

In 2016, iPhone maker sold 2.5 million units in India, its most ever. And while Chinese vendors led the lower-priced devices market, Apple ruled the premium segment—handsets priced above US$450—with 62% of the market.

Apple sales got an unlikely boost from demonetization in November. The company also made headway with the otherwise-resistant government and it is finally setting up shop in India. Within weeks, Apple is expected to start producing (paywall) the iPhone 6, iPhone 6S, and iPhone SE out of Taiwanese manufacturer Wistron’s Bengaluru factory and it has secured permission to set up a distribution center on the outskirts of Mumbai.

But the Modi government has been quick to remind the Cupertino, California giant that the bigger battle is yet to be won. Most of the concessions Apple has sought have not been granted, commerce and industry minister Nirmala Sitharaman told the Rajya Sabha (Council of States).

Since January, Apple has pushed to relax the mandated 30% local sourcing of components, and to waive custom duties on components. On March 22, Sitharaman said her ministry had denied “concessions including duty exemption on manufacturing and repair units, components, capital equipment (including parts) and consumables for smartphone manufacturing and service/repair for a period of 15 years.”

Apple has struggled to gain a strong foothold in India, where its products can cost more than US$1,000—well above the $158 average smartphone price in the South Asian country.

Before seeking financial incentives, Apple tried to curb costs in other ways: It sought permission to sell refurbished second-hand devices, but the government blocked those plans, citing India’s snowballing e-waste problem. Recently, Apple resurrected the discontinued iPhone 6 at a lower price. But with comparatively weak services and stiff competition from Chinese phones, Apple has a long way to go.

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