Apple has a big week planned in India, where the iPhone maker has growing ambitions.
After opening a flagship store in Mumbai, CEO Tim Cook will travel to New Delhi to meet with Indian Prime Minister Narendra Modi on Wednesday. Modi is keen to discuss Apple's plans to continue expanding across the country and about the number of new jobs the company will create, according to people with knowledge of the matter.
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Modi also wants to hear from Cook about the challenges he's facing in trying to grow the company's production across the different states, said the people, who asked not to be named because they weren't authorized to speak publicly on the topic.
"Among the biggest impediments now are at the state level," said Nelson Cunningham, co-founder of diplomatic solutions firm McLarty Associates. "That's where companies are finding the most headwinds," added Cunningham, who recently returned from a trip to India.
An Apple spokesperson declined to comment about a meeting with Modi.
Apple has been expanding iPhone manufacturing in India through its suppliers. JPMorgan estimates Apple will move 25 percent of its iPhone production to India by 2025.
Apple's growth in India is widely seen as a success story by Modi and Indian officials. In November, a group of state ministers were deployed to the U.S. to meet with big companies in New York and across Silicon Valley, sources said. Their pitch? You, too, can be like Apple and manufacture and sell in India.
At a recent Council on Foreign Relations meeting that CNBC attended, a high-ranking Indian official said Apple's achievements represent a good case study for companies considering investing in India.
But Apple's challenges in India's consumer market are apparent. India's smartphone market is dominated by Google's Android phones, which are typically less expensive than iPhones. Google's control is so great that the company was slapped with an antitrust fine of $160 million, which was upheld in March by an appeals court in India.
Dan Ives, an analyst at Wedbush Securities, is optimistic on Apple's prospects.
"Rome was not built overnight and neither will Apple's broader India strategy," Ives wrote in a note to clients on Monday.
More broadly for U.S. tech companies, there are concerns about how the Indian government navigates data collection, and a competition policy that's currently tabled in India's parliament.
"Where India lands on data protection is an open factor right now," said Cunningham. "Where they come out will determine whether foreign firms go deeper into India."
Another issue is a lack of highly specialized labor. While India is on pace to surpass China as the world's most populous nation, its information technology sector only employs roughly 5 million people.
Some major U.S. corporations have built footholds in India through acquisitions. Walmart bought control of e-retailer Flipkart for $16 billion in 2018. Flipkart and Amazon are dueling for the top spot in India's e-commerce market, and both face competition from newcomer Meesho.
Disney entered the country following its $71 billion purchase of Fox's entertainment business. That deal brought with it Star India, which is the nation's leader in sports media. According to Media Partners Asia, Disney's Hotstar streaming service had 49 million subscribers in 2022 in India, versus Amazon Prime Video's 17 million and 7.5 million for Netflix.
"Disney has focused on the mainstream, Bollywood content that appeals to the masses," said Pramit Chaudhuri, Eurasia Group's head of South Asia.
— CNBC's Steve Kovach contributed to this report
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