Apple sales in India are down 30% this year. ET has a good write-up. India now has the second largest smartphone market in the world. They don’t want all the profits and jobs going to Chinese and Koreans. India is using 20% tariffs to encourage, “Make in India.” The first factories are mostly simple assembly, but India has a plan to rapidly increase local content as well. Samsung has just opened a $107M plant.
The emerging Indian phone market was devastated the last few years by lower-priced Chinese companies. Three of the top five mobile brands in 2015, but aggressive Chinese competitors and a quick shift to 4G knocked them out of the running. Apple has been demanding huge giveaways from the Indian government before starting manufacturing. “We’re Apple. India needs us.” India refused, and Xiaomi & Vivo have been grabbing the market. Apple probably still makes the best phones in the world, but half a dozen others are so close the functional differences are trivial.
India and China intend to catch up to the U.S., which had a huge lead in developing Internet industry. Apple, Amazon, Google, Microsoft, & Facebook are the five largest Internet companies (market cap.) But Tencent and Baidu are currently #6 & #7 and have been higher. They would never have grown to that size without government protection. India wants to replicate that success.
That “Infant Industries” need protection was crucial U.S. economic policy after Independence. It was generally agreed that until the U.S. industries grew, they could not compete with the economies of scale in Britain. It worked: we were among the first countries to industrialize.
Globalization is not a good thing if the rich get richer and little trickles down.