India has rejected a plan by Apple Inc to import used iPhones, government officials said on Wednesday, a blow to the U.S. tech giant that has been seeking to revive waning sales of its flagship smartphones.
Apple sells what it calls refurbished iPhones at a discount in some countries, including the United States. Extending this practice to India would have likely helped it increase its share in one of the world's fastest growing smartphone markets against competitors with much cheaper offerings.
But India, which is pushing a 'Make in India' initiative to boost the competitiveness of its manufacturing sector, rejected the proposal citing rules against importing used electronics.
"India does not encourage dumping or recycling of hazardous materials," NN Kaul, a spokesman for the telecom ministry said.
Apple's proposal was opposed by domestic phone makers who claim selling refurbished iPhones - devices that have been returned by buyers or repaired to factory condition after damage - would breach India's anti-dumping rules. The Consumer Electronics and Appliances Manufacturers Association had written to India's telecom ministry to stall the move.
An Apple spokeswoman in Singapore did not immediately respond to an email seeking comment.
The news comes at a time when Apple posted its first-ever drop in iPhone sales amid weakness in China, its most important market after the United States.
In India, Apple only has about a 2 percent market share but its sales there surged 56 percent in the first three months, driven mainly by cheaper older-generation devices such as the iPhone 5S while demand for the new iPhone SE disappointed.
"The 5S' success in India has more to do with affordability of a premium brand than a preference for smaller phones, and the move to the more expensive SE will discourage budget buyers," said Wilmer Ang, an analyst at research firm Canalys.
The newly launched iPhone SE retails at 39,000 rupees ($585) in India - almost $200 higher than its U.S. price.
To successfully tap into India's smartphone boom - where sales are expected to grow 25 percent this year - Apple will need a better retail presence and cheaper versions of the iPhone given the average smartphone in the country sells for less than$150, according to analysts.
Apple, which currently retails in India through local partners, is already seeking government approval to set up its first store in the country.