Apple Inc's India revenue doubles to around $3.3 billion: Analysts

Country's share in total revenue still below 1%

Apple Inc has hit Indian revenues of around $3.3 billion, based on estimates for the period between 1 October 2020 and 25 September 2021, say analysts.

The assessment is based on an earnings call on Apple’s financial results for its FY 21 fourth quarter announced last week. Apple Inc CEO Tim Cook said that the company had doubled its business in India and Vietnam in FY 21, although he did not divulge any further details.

However, analysts say that despite Apple’s heady growth in India, the share of the country in its overall revenues is still below 1 per cent, which reflects the large opportunity for growth in the market.  Apple Inc reported a total net sales of $365.81 billion in FY21 (or $1 billion a day), and the share of Indian revenues accounts for 0.9 per cent of it. Analysts say that this is an improvement over FY20, when the share of revenues in India was 0.6-0.7 per cent of Apple’s global net revenues.

Moreover, while around 60 per cent of the revenues in India came from the sale of iPhones in FY 21, this, too, accounts for just over 1 per cent of its total phone sales across the globe. An Apple spokesperson in India declined to comment on the matter.  

Cook pointed out that emerging markets such as India now account for a third of the company’s global sales. The growing importance of India as a market can be seen from the fact that for the first time, a new iPhone model, iPhone 13, was launched in India on the same day as other key global markets like the US, China, UK, UAE , Germany, Australia, amongst others. Earlier, Indian consumers had to wait three to four weeks to get the latest iPhone after it was launched elsewhere.

Still, India’s role in Apple’s scheme of things has a long way to go. To put it into perspective, the revenue share of India in the rest of Asia (excludes Japan and Greater China) in FY 21 for Apple Inc was around 12-13 per cent. Its net sales in the rest of the Asia Pacific hit $26.3 billion in FY 21, accounting for over 7.1 per cent of its total revenues. In contrast, Greater China accounts for 18.67 per cent of Apple’s total revenues and is the third largest market after the US and Europe. 

Of course, the key change in Apple Inc’s strategy is to have made India an alternative manufacturing base, a departure from the time when the bulk of its products were made in China. Three of the company’s major vendors, Foxconn, Wistron and Pegatron, are investing substantially in India under the production-linked incentive scheme and are already exporting phones from the country.

The move has also helped Apple Inc push the production of its latest phones for India’s domestic market instead of importing them, which reduces costs and price. Currently, an estimated 70 per cent of the phones sold in India are already manufactured here. These include its bestselling model, iPhone 11, apart from iPhone 10, iPhone 12 and Apple SE. However, its latest model, iPhone 13, is in short supply in the country and is being imported together with Apple 12 Pro and Pro Max. 

Unfortunately, the high duty structure on imported phones (22 per cent basic custom duty and 18 per cent GST on that price) in India has led to these high-end phones being smuggled from Dubai and the US, where they are far cheaper than in India. 

GROWING MARKET

• India revenues of Apple Inc was less than 1 per cent of its total revenues in FY 21, upto September.
• About 60 per cent of revenues in India came from the sale of iPhones. This is higher than the global average of 52 per cent.    
• India’s value share of iPhones has just crossed over 1 per cent of Apple’s total phone sales.  
• Its revenue share in the rest of the Asia Pacific (excludes China and Japan) region is around 12-13 per cent  
• All Apple’s key phones are being manufactured in India except the recently launched iPhone 13 and the Apple 12 Pro and Pro Max.
• High import duties leading to the latest models being smuggled from Dubai and the US.