Tim Cook’s Charm Offensive Might’ve Just Failed In India

Last week, Apple CEO Tim Cook had arrived in India. He’d partied with the Bollywood elite, watched IPL matches, and inaugurated Apple’s first Indian development center. But all those items were mere distractions – what was central to his agenda was setting up Apple stores in the country. This would’ve allowed Apple to sell their smartphones directly to Indian consumers and become a major player in the Indian smartphone space. It now appears that that isn’t likely to happen.

tim cook

According to a report by Bloomberg, India’s Foreign Investment Promotion Board has ruled Apple can’t set up its own retail stores in India. Indian regulations currently state that 30% of components must be locally sourced if a company wants to sell through its own retail stores. Apple products, which manufactured primarily in China, don’t meet this criterion.

While India can provide waivers for cutting-edge technology companies, the panel has apparently decided it can’t certify Apple for that exception. The FIPB decision needs to be ratified by the government and it could still be overruled.

Apple’s iconic stores form the cornerstone of its brand. Apple has the highest sales per square foot of any retailer in America through its stores, generating a staggering $4,798.82 in sales per square foot on annualized basis. These stores serve as the focal point of Apple’s sales, and are present in most markets, including China, where Apple has large marketshare.

But things are done differently in India, where FDI is still looked at with suspicion and local manufacturing is encouraged. It shall be interesting to see how Apple’s India strategy changes after this setback.

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