Apple's Struggles In India, Explained

India was once considered by some analysts to be a key area of growth for Apple Inc. (NASDAQ: AAPL) but the high price tag of its iPhone is to blame for Cupertino's underperformance in the market, according to Ravi Agrawal, Foreign Policy managing editor and author of "India Connected."

What Happened

It might come as a surprise to some, but the cost to buy an iPhone in India is higher than in western countries, Agrawal said Monday  on "Bloomberg Technology."

The reason for the higher price: India's import duties on both iPhone components and the finished product. In addition, the much higher-priced iPhone competes with local Indian- and Chinese-made smartphones that typically retail for $100 to $200.

Why It's Important

India remains a "very poor" country, with the average consumer willing to spend $50 to $200 on a smartphone, Agrawal said. Even if Apple sells refurbished older models to Indian consumers, they will still be priced above the market, he said. 

What's Next

Despite Agrawal's concerning take on Apple's Indian prospects, the company continues to negotiate with the country's government to open new stores.

Apple CEO Tim Cook said during the company's recent conference call he remains a "big believer in India" and is "very bullish on the country and the people."

Related Links:

Analysts Break Down Key Issues From Apple's Q4 Print

Bank Of America Cites Near-Term Concerns In Apple Downgrade

Photo courtesy of Apple.