Apple CEO Tim Cook Calls India a ‘Huge Opportunity’: Would More Investments Follow?

US tech CEOs including Apple’s Tim Cook, Microsoft’s Satya Nadella, and Alphabet’s Sundar Pichai met Indian Prime Minister Narendra Modi on his state visit to the country. Cook described India as a “huge opportunity” leaving markets guessing on whether Apple would expand its investments in the country.

Modi is on his first state visit to the US. Before the nearly one-hour meeting with the wide array of tech leaders, he also met with Tesla’s CEO Elon Musk.

Musk too praised Modi and his vision for India. That said, the EV giant hasn’t committed to setting up a plant in India.

Over the last couple of years, there have been multiple reports that Tesla might set up a plant in India. However, the talks haven’t made much headway due to the high import tariffs that the country imposes on car imports.

Cook calls India a “huge opportunity”

Meanwhile, Apple has gradually expanded its business in India and after meeting Modi, Cook said that India is a “huge opportunity.” Responding to a question on whether Apple would continue to expand in India, Cook talked about the opening of the two retail stores in the country earlier this year.

Apple opened two retail stores in India

In April, Cook inaugurated two retail stores in India – one each in Delhi and Mumbai. Cook had then tweeted, that Apple is “committed to growing and investing across the country.”

Notably, the opening of retail stores in India was a big step forward for Apple and analysts see it as a sign of the importance that it attaches to the country. Cook has talked up the potential of the Indian market multiple times previously also.

Apple is bullish on India

During Apple’s earnings call for the December quarter, Cook was upbeat on the company’s prospects in India and said it posted record revenues in the country in the quarter even as its overall revenues fell 5%.

During the earnings call, Cook said, “India is a hugely exciting market for us and is a major focus.”

He added, “We actually did fairly well through COVID in India, and I’m even more bullish now on the other side of it or, hopefully, the other side of it and that’s the reason why we’re investing there.”

Apple has a nearly 5% market share in India

Another aspect worth considering is that Apple’s sales in India have also soared and it now has a 5% market share in the country. While the overall market share would seem low that’s because most of the smartphones sold in the country are in the budget range. But when it comes to premium smartphones, Apple is the market leader in India.

That said, the country accounts for just around 2% of Apple’s revenues even as the sales are growing at a brisk pace.

Cook on India versus China question

During the earnings call for the March quarter, Cook said that India is an “incredibly exciting market” and a “major focus” for the company.

Cook added, “There are a lot of people coming into the middle class, and I really feel that India is at a tipping point, and it’s great to be there.”

According to Cook, “The switcher and first-time buyer metrics look very good there for India.”

In response to an analyst question on how the Indian market compares with China a decade back, Cook said, “I think each country is different and has their own journey, and so I hesitate to compare too much. But what I do see in India is a lot of people entering the middle class, and I’m hopeful that we can convince some number of them to buy an iPhone. And we’ll see how that works out. But right now, it’s working out well.”

Previously, the Apple CEO said that the company would use its learnings from China to grow the business in India.

Apple is diversifying its supply chain

Apple has been gradually diversifying its supply chain from China. The Indian government said earlier this year that Apple would produce a quarter of iPhones in the country.

While that number looks farfetched, at least for now, analysts believe that Apple might source between 10%-15% of iPhones from India.

Foxconn is expanding its business in India

In a related move, Foxconn – which produces most of the iPhones globally – is expanding its manufacturing footprint in India.

India’s population has surpassed China which makes it the world’s most populous country – with a growing and aspirational middle class.

Also, with little chance of reconciliation between the US and China and the tech war between the world’s two biggest economies only expected to escalate, India looks in a sweet spot given that it’s a key US strategic ally.

Cook praised the Chinese manufacturing ecosystem

Cook has tried to strike a balance between India and China and was all praise for the Chinese manufacturing ecosystem during his visit to China earlier this year.

Responding to a question on shifting supplies from China, Cook said during the March quarter earnings call, “We’re investing in the U.S. We’re investing in a number of other countries as well. And so, we make products everywhere. We’ll continue to invest everywhere. And we’ll continue to look for ways to optimize the supply chain based on what we learn each and every day and week and so forth to ensure that we can deliver the best products and services for our customers.”

All said, given the geopolitical realities, US companies like Apple might continue to diversify their supplies from China and India is trying to lure such companies with subsidies as well as promises of a supportive regulatory environment.