Here’s Why Apple Is Exploring Manufacturing Its Products in India

Apple is reportedly exploring the idea of manufacturing its products in India, as well as opening retail stores in the country, according to a new report.

Cupertino is discussing the matter with Indian government officials in an apparent effort to expand sales and grow its presence in the country. Last month, the tech giant sent a letter to the Indian government outlining its plans and seeking financial incentives. Reportedly, senior Trade Ministry authorities have met in recent weeks to discuss the prospect, according to the Wall Street Journal.

Apple controls less than 5 percent of the booming smartphone market in India. Manufacturing its products locally would allow the company to more easily open Apple Stores in the country. Current restrictions prevent companies from opening their own retail stores unless they purchase at least 30 percent of materials from Indian vendors, and India currently lacks high-end parts suppliers. But that’s after a recent loosening of restrictions — in July, Indian government officials approved a measure that would allow some companies a three-year exemption from that rule, according to CNBC.

Apple CEO Tim Cook visited India in May 2016, and discussed the matter with Prime Minister Narendra Modi in New Delhi, CNBC reported. The visit solidified the country’s importance to Apple, and roused hope that the company’s iconic brick-and-mortar outlets would soon be opening in the country. In addition to Apple Stores, Cupertino is also exploring bringing its services — such as Apple Pay — to the booming market. Apple currently sells its devices in the country through locally owned distributors and retailers.

Cupertino is reportedly trying to emulate its China model in India, the WSJ reported. In last month’s letter, the company reportedly sought tax exemptions and other financial incentives due to the fact that they make “cutting-edge” and “state-of-the-art” tech that can’t feasibly be manufactured with current local sourcing, Digital Trends reported.

India’s smartphone market is quickly expanding, and is expected to overtake the U.S. as the second largest overall market behind China by 2017, according to research analysis firm IDC.