Apple, Inc. (NASDAQ: AAPL) is set to benefit from a reduction in import duty on smartphones and key components in India with the finance minister of the nation proposing an amendment to duties levied on these imports from 20% to 15%. According to Counterpoint Research co-founder Neil Shah, Apple is importing around 12% of iPhones sold in India. Based on his calculations, the reduction in taxes will result in $50 million in annual savings for the company. India is a key target market for Apple because of the sheer size of the opportunity in India. As of 2023, India was home to 1.2 billion mobile phone users, out of which 750 million people were using smartphones. This makes India the second-largest smartphone market in the world with a lot of room for growth amid substantial IT infrastructure spending by the Indian government. Apple controlled just 6% of the Indian smartphone market as of Q1, but with favorable regulations, the company may see higher penetration in the future.

How Apple Won China

China is an important end market for Apple given that it is the world’s largest smartphone market. China has historically accounted for around 20% of Apple’s annual sales, making it the single most important market for Apple behind the United States. Apple, in the last few quarters, has come under pressure in China due to increased competition from local brands such as Huawei, the economic growth slowdown in China, and geopolitical tensions that have impacted consumer sentiment toward American brands. In the second quarter of Fiscal 2024 which ended in March, Apple’s market share in China declined by 4%, and revenue in the Greater China region fell by 8% YoY amid these challenges.

Since then, Apple has regained some lost ground by offering discounts coinciding with major Chinese shopping events such as Singles’ Day and the 618 Shopping Festival. In addition, the company partnered with local e-commerce giants such as Tmall and JD.com to drive sales as well. To improve brand visibility, Apple launched a new targeted marketing campaign in China as well. Last April, iPhone sales in China increased by 52%, highlighting the positive impact stemming from these initiatives.

Bursting Through The Ceiling

Apple’s recent wins in China and India, the two largest smartphone markets in the world, signal a promising outlook for iPhone sales growth in the coming years. When Apple’s AI features are released in September with iOS 18, the company’s recent wins in these fast-growing markets will prove to be handy. Apple’s strong comeback in China is a testament to the company’s ability to thrive in challenging operating conditions. In addition, success in these markets positions Apple as a leader in innovation as well. Overall, Apple’s success in India and China sets the company for strong long-term growth.

Dilantha DeSilva does not have positions in Apple. Stocks.News does have positions in Apple.