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There we said it! Apple CEO Tim Cook’s India visit didn’t go as planned

The CEO’s visit came at a time when iPhone sales are declining and India has scaled up to be the fastest growing smartphone market globally.

tech Updated: May 23, 2016 22:50 IST
Anirban Ghoshal
Anirban Ghoshal
Hindustan Times
Apple,Apple India,Sanjay Kaul
Prime Minister Narendra Modi, right, meets Apple CEO Tim Cook, in New Delhi on Saturday.(AP)

Apple’s refurbished pre-owned iPhones sales dish is far from cooked.

Apple CEO Tim Cook’s four-day India trip didn’t go as planned as Prime Minister Narendra Modi, at least for the time being, has turned a blind eye to the Cupertino-headquartered giant’s push to sell refurbished pre-owned iPhones here.

The CEO’s visit came at a time when iPhone sales are declining and India has scaled up to be the fastest growing smartphone market globally.

Cook met the PM at Race Course Road Complex at 11.15 am on Saturday and seeking permission to sell pre-owned refurbished iPhones was on top of his agenda after the government is believed to have rejected a formal proposal from the company just two weeks back. The company had earlier applied for the same while the Congress government was in power, only to be rejected by the environment ministry which cited e-waste or dumping issues as the primary reason for rejection.

However, while following up with the ministry, sources said that the formal proposal was not rejected yet and is still under consideration.

In this Handout photograph provided by Apple Media office, Apple chief Tim Cook talks with Indian colleagues during the inauguration of the Apple's Map development office in Hyderabad, India, Thursday, May 19, 2016. Apple will set up an app design and development center in southern India, the company announced Wednesday, shortly after company chief Tim Cook arrived in the country on his first visit. (AP)

Read more: Tim Cook’s India visit may really be about Apple TV, not iPhones

Top government sources told Hindustan Times that Cook told PM Modi that as of now, the company had no corporate plans for opening a manufacturing facility in India but assured him that he will discuss the Indian proposal with his team back home. During the 30-minute meeting it was quite evident that Apple’s India plans were not in sync with PM Modi’s “Make in India” vision, who did not want to make a one-time exception for any multinational company particularly when South Korean mobile phone giants are manufacturing in India.

It is understood that Cook told PM Modi that he wanted India to give permission to Apple to follow the China model in India, where the company would bring pre-owned mobile phones to India then sell it in the market after refurbishing them. “The PM made it very clear that refurbished phones were not India’s immediate focus as he was conscious that these phones would wipe out low cost Indian phone manufacturers in terms of competition and technology. Even the Indian phones have foreign components of some manner. Even Taiwanese company Foxconn is willing to set up a manufacturing plant in India,” said a senior official.

Industry sources also confirmed that intense lobbying by rival handset vendors is forcing the government to disallow Apple from selling refurbished phones.

Apple’s CEO Tim Cook visits the Golconda Fort in Hyderabad in Hyderabad on Thursday. (PTI)

Read more: Watch | PM Modi meets Tim Cook

Government sources also said that the Modi government was pleased that Cook found time to visit states of Maharashtra and Andhra Pradesh and added that the two sides, post meeting, are now planning to work out a scheme where Apple could open a manufacturing facility with a significant percentage of export content or ancillary units so that venture turns profitable for the iPhone manufacturer in the long run in India. Globally, Foxconn’s Hon Hai Precision subsidiary contract manufactures iPhones for Apple and earlier media reports have hinted that Foxconn wants to make Apple devices in the country in a new $10 billion plant in Maharashtra.

However, Apple will not benefit by manufacturing in the country, analysts have said citing the price-sensitive nature of the Indian market and its low volume of sales. India accounts for just one percent of global iPhone sales and Apple’s share of India’s mobile handset sales is just 1.5 percent, hence it makes no sense for the company to make big investments in the country in terms of manufacturing.

In addition, the larger part of the Indian smartphone market is under Rs 5,000 and Apple devices start at a minimum price of Rs 25,000 making it ‘too premium’ for consumers. Also, older iPhones, though cheaper, don’t sell in India. Apple, therefore, has a problem. Its newer models are expensive and its cheaper models are too old to be interesting for Indian buyers. Hence expansion of consumers is a challenge for the company.

But the case would be different if it was allowed to sell refurbished smartphones. It’s market share would incerase rapidly due to the aspirational value that iPhones have. This would also allow other smartphone-makers to refurbish phones and would result in dumping of smartphones in the country.

Filmmaker Mukesh Bhatt takes Apple CEO, Tim Cook on a tour of Mehboob studio in Mumbai on Wednesday. (PTI)

Read more: Apple wants to sell refurbished phones, lower prices: Apple CEO Tim Cook

The chief executive’s visit, however, has seen announcement of two new facilities in the country which will attempt to tap in the software talent of the country. Apple is expected to open a new mapping facility in Hyderabad and an app development facility in Bengaluru.

Cook, who met the PM after his visit to Silicon Valley on September 27, 2015, unveiled a new version of Narendra Modi app praising the ease of doing business in the country.

In an interview with an Indian TV channel on Friday, Apple’s CEO had asserted that he was looking at India holistically and Apple was “here for the next thousand years” -- a comment that was hailed by communications minister Ravi Shankar Prasad at an event later.

“I complement Apple chief executive for a public commitment of one thousand years in India. We are ready to work together,” Prasad said.

Apple’s CEO Tim Cook interacts with Anant Ambani, son of industrialist Mukesh Ambani, outside Siddhivinayak Temple in Mumbai on Wednesday. Apple India head Sanjay Kaul is also seen. (PTI)

Read more: Apple CEO Tim Cook says it’s the right time to be in India

Cook also met Sunil Mittal, chairperson of Bharti Airtel, one of India’s leading telecommunication companies which was the first to launch 4G in India and set to offer the service countrywide.

Cook, who was on his maiden visit to India and, is also believed to have entered into a long term strategic partnership with Reliance Industries for boosting iPhone sales and providing fillip to the new telecom service.

The decision to enter into a strategic partnership, which is believed to have Cook’s principle nod, was taken in a meeting between RIL chairman Mukesh Ambani and Cook in Mumbai from where the Apple top boss has kickstarted his India tour on Wednesday after arriving late on Tuesday.

The CEO, who paid a visit to the SiddhiVinayak temple in Mumbai, also attended an IPL match between Kolkata Knight Riders and Gujarat Lions in Kanpur after being invited by IPL chairman Rajeev Shukla.

(With inputs from Sishir Gupta)

First Published: May 23, 2016 16:44 IST