Pricing is going to be a big problem for the iPhone SE in India

Set to launch at ₹39,000 ($586), the iPhone SE remains out of reach for most Indian consumers.

The iPhone SE is set to make its debut in India on April 8. Unfortunately, while Apple may be pinning its hopes on its new mid-range phone to make a dent in emerging markets, the company isn't doing itself any favors with the pricing.

Tariffs and taxes

In fairness, the odds have been stacked against the iPhone's success in India from the beginning. With the government heavily promoting the "Make in India" initiative, which incentivizes local manufacturing for smartphone makers, any brand that imports phones into the country will face heavier duties and taxes; this has a direct correlation on the device's retail pricing in India.

Apple is looking into local manufacturing: Foxconn is in the process of setting up factories in India, which could pave the way for local iPhone production in the future — but we'll have to wait at least three years before those locally-assembled smartphones come to fruition.

In the meantime, the rise of Chinese manufacturers in recent times has led to a smorgasbord of smartphones that offer great value for Indian consumers. These devices cost less than Apple's premium-tier models even when imported, but Chinese vendors have also invested heavily in the Indian ecosystem: They've built factories to produce phones locally, which further drops costs for consumers. Xiaomi is making its entry-level Redmi Note devices in South India, while Vivo and Oppo are setting up factories near Delhi; all of Samsung's devices sold in the country are locally assembled as well.

A smartphone out of reach

The imported iPhone SE will launch on April 8 at ₹39,000 ($586), more than ₹9,000 pricier than its fellow Android mid-range competitors. This is a hard sell for a price-conscious Indian market, which values cost-effective smartphones over most else. Worse, this is a fact Apple is well aware of: The iPhone 5c, the company's previous budget smartphone, had an absolutely dismal performance in the country after it debuted at a whopping ₹37,500 ($560) for the 8GB model.

The iPhone 6s was similarly overpriced: It launched at ₹62,000 ($930), but Apple had to drop the price to the tune of ₹10,000 within a month to stay competitive in the high-end space. The 16GB model currently retails in India around ₹39,000 — and yes, that means the 4-inch SE will actually launch in direct competition with its bigger 4.7-inch sibling.

Even with drastic price cuts on Apple's latest models, older-generation iPhones still contribute to a bulk of sales in the country. Of the 800,000 units that were sold in the last quarter, more than half of those were older models that retailed for under ₹35,000. It's one of the main reasons why the iPhone 5 — almost four years old at this point — still sees strong sales, whereas Android devices half its age aren't even stocked by retailers.

The potential for greatness

India is a key market for Apple: It has the potential to attract millions of new customers, most of whom will be buying a smartphone for the first time. But for the iPhone SE to not turn out like the 5c, the company must position the device as an alternative to mid-range Android handsets, such as the Moto X Style and the OnePlus 2; both are currently available in India for under ₹25,000. One of the reasons why the Chinese contingent of Lenovo, Huawei, Xiaomi, and OnePlus has seen such success is due those vendors offering compelling hardware at an attractive price, often undercutting entrenched brands.

There's no question that the SE is a stellar device in its own right, with internals that are virtually identical to the 6s, but for the phone to gain momentum in the country, it needs to be sold at a ₹30,000 price point. Even that is a pretty significant investment for most, but customers are willing to pay more for an iPhone over an Android handset considering its strong resale value and brand cachet. And unlike the Chinese brands, Apple does not have to go out of its way to promote its phones in India: All it needs to do is price them effectively.

The iPhone SE was long-rumored to be Apple's halo device for India, but at its current price point, it's just not feasible. If the company can bring down the price after launch, it will have a winner on its hands; in the meantime, Indian consumers who want that mid-level iPhone will have to be content with waiting a little longer.