Wow, India just announced that Apple is exempted from their local production requirements for foreign retailers. Don’t let the magnitude of this announcement pass you by. It means that either there is a huge crack in the dam that is the Indian bureaucracy or Apple’s power is just shy that of a world superpower. Either way, this is enormous.
Few announcements would have surprised me more.
Most people probably don’t appreciate how significant India’s announcement is because they aren’t aware of how heavy handed India has been with foreign companies in the past. But I spent a lot of time in New Delhi India on behalf of my employer because of India’s local manufacturing requirements. We were an $8 Billion per year company and our customers desperately wanted us to get into India. We resisted because we didn’t want to license our secret formula’s and teach local Indian companies to produce our signature products. Companies that could someday be our competitors and we were giving them everything on a silver platter.
But we eventually capitulated and gave India everything they wanted. Since we didn’t want to pay 40% import tariffs, which would have killed any chances of market penetration, we were forced to launch a local wholly owned subsidiary. This subsidiary would then contract manufacturing out to local Indian manufacturers. It was my job to design, implement, and install the inventory management system at our subsidiary and train the local accountants. I ate a lot of Naan, learned a little Hindi, and never got used to all the horn honking while cruising in a taxi.
With China showing signs of slowing down this couldn't have come at a better time for Apple. With over 1.3 billion people in India and a middle class that is about 10% of the population that means a pool of potential buyers of over 130 million. The Indian middle class alone would outnumber the entire population of Mexico which is at 120 million.
I don't know how Apple won this battle but I'm impressed. Somebody in the Apple hierarchy is popping champagne corks tonight.
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Most people probably don’t appreciate how significant India’s announcement is because they aren’t aware of how heavy handed India has been with foreign companies in the past. But I spent a lot of time in New Delhi India on behalf of my employer because of India’s local manufacturing requirements. We were an $8 Billion per year company and our customers desperately wanted us to get into India. We resisted because we didn’t want to license our secret formula’s and teach local Indian companies to produce our signature products. Companies that could someday be our competitors and we were giving them everything on a silver platter.
But we eventually capitulated and gave India everything they wanted. Since we didn’t want to pay 40% import tariffs, which would have killed any chances of market penetration, we were forced to launch a local wholly owned subsidiary. This subsidiary would then contract manufacturing out to local Indian manufacturers. It was my job to design, implement, and install the inventory management system at our subsidiary and train the local accountants. I ate a lot of Naan, learned a little Hindi, and never got used to all the horn honking while cruising in a taxi.
With China showing signs of slowing down this couldn't have come at a better time for Apple. With over 1.3 billion people in India and a middle class that is about 10% of the population that means a pool of potential buyers of over 130 million. The Indian middle class alone would outnumber the entire population of Mexico which is at 120 million.
I don't know how Apple won this battle but I'm impressed. Somebody in the Apple hierarchy is popping champagne corks tonight.
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