APPLE - WILL IT 'COOK' THE RIGHT PIE WITH INDIAN MASALA?

By Ruma Dubey

For most of his working life, the founder of Apple, Steve Jobs avoided India. There is really no exact reason for his aversion to India but the story goes that when he was 18 years old, when he had not even envisioned Apple or Mac, he and his friend came to India, seeking enlightenment. But they were disappointed. In his biography, Jobs said that he found India to be intense and disturbing and ended his search for enlightenment very abruptly. He concluded about his India trip saying, “We weren’t going to find a place where we could go for a month to be enlightened. It was one of the first times that I started to realise that maybe Thomas Edison did a lot more to improve the world than Karl Marx and Neem Kairolie Baba put together.”

Later in 2006, Jobs probably decided to have a relook at India and there was talk of setting up a Mac support center in Bangalore, with some 3000 employees. They had even hired some 30 employees but that plan was nixed as Jobs neither approved of the quality nor the cost of setting shop in India. The 30 employees were fired and the support center never took off. Even later, it was seen that India was the last place to see the new iPhone launches and they were always priced much higher than rest of the world. Thus Apple has barely been a player in India, till now.

Yes, one should learn to forget and forgive, embrace a changed mindset. Tim Cook knows the potential of India and nurtures no such disenchantment. Thus he and his plans for India have been welcomed with open arms and wide smiles, even from PM Modi. Without making any significant investment in the country, Apple has shown a 56% growth in revenue in its first quarter but has just 3% of the smartphone market share. Apple does see the opportunity that India represents and having its own retail outlets across India will surely boost its growth further. Apple currently sells its products in India through a network of Indian-owned distribution companies and retailers.

Tim Cook announced plans to set up a manufacturing hub in Hyderabad and open retail outlets all over the country. But there is apparently a catch there. As per the FDI rules, single brand retailers which bring in more than 51% stake need to buy at least 30% of the manufacturing material from Indian vendors, mainly from small and medium scale vendors. This requirement can be waived if the retailer is bringing in a state of the art, cutting technology, which is not available in India. To ascertain this waiver, a panel in Delhi scrutinizes the proposals. This was done so for Apple and the panel recommended that this local sourcing rule could be waived off. But the Foreign Investment Promotion Board, along with the Finance Minister Arun Jaitley have disagreed.

In America, around many forums this topic has become a raging debate. There, naturally this protectionism attitude of India is being looked down upon, an infringement on free trade practices. Majority feel that if India applies this rule to Apple, why shouldn’t local American companies apply the same rule there on Indian companies? As such there is a major xenophobic fevor spreading across the country and Trump is adding fuel to the fire. If Trump gets elected (God forbid) and India imposes this rule on Apple, many warn that repercussions for India could be bad.

Here, we in India feel, why not? We need to protect jobs here, create more employment for the teeming youth and this is a way to do that. Companies coming and setting shop as mere profit centers without adding to the local economy is detrimental. In today’s world, we need to adopt this protectionism attitude. And put in another way, Apple, like Microsoft, instead of nurturing so much ego, could have come to India long time ago; then this talk would have never come. Now the circumstances have changed and whether America likes it or not, India and China are needed for their companies also to grow.

It is good that we are standing up for the interest of our country first; FDI will come as Apple needs India today as much as we need them.