Apple terminates distributor contracts to curb gray market iPhone exports
What's the story
Apple is cracking down on the gray market for iPhones in India. The tech giant has terminated contracts with four distributors in Punjab and one each in Mumbai, Haryana, and southern India. More terminations are under review as part of a major strategy shift to curb illegal exports of iPhones from India to regions like Russia, Africa, and West Asia.
Market dynamics
Revamping retail partner strategy
India's competitive pricing has made it a key sourcing hub for traders looking to tap into high-margin international markets. In response, Apple is revamping its retail partner strategy. The company now favors larger partners and has reduced premium partner contracts from three years to about one year. This is part of Apple's broader effort to protect its domestic pricing structure and prevent leakages disrupting official sales channels.
Retail regulations
Strict in-store activation protocols mandated
Distributors have sent a strong message to retail networks, mandating strict in-store activation protocols to prevent illegal diversion. Retailers have been instructed not to engage in any transactions that could facilitate overseas shipments. "Under a mandatory process, retailers must open the device seal in-store, transfer data, insert a SIM and activate the handset before handing it over to customers," a distributor said.
Export statistics
iPhones dominate India's smartphone exports
According to Commerce and Industry Ministry data for the first 11 months of FY26, iPhones account for over 75% of India's smartphone exports. This amounts to some ₹2 trillion (nearly $22 billion) out of total shipments worth around ₹2.6 trillion (nearly $29.4 billion). While industry estimates suggest that 5-7% of these exports are through unofficial channels, nearly half are routed to Russia where Apple suspended operations after the Ukraine war.
Compliance measures
New billing and compliance mechanisms introduced
Apple has also introduced new billing and compliance mechanisms. All iPhone and iPad sales will be invoiced strictly at maximum retail price (MRP), with margins passed through credit notes released only after verification via India Unbrick activation data. Settlements will be processed weekly along with regular reconciliation reports. "This step is not a restriction—it is a correction," said a distributor in their communication to partners.
Partner ecosystem
Partner ecosystem getting a major overhaul
Apple is also recalibrating its partner ecosystem, focusing on large-format retailers with 20-30 stores. The company is moving away from smaller partners with just a few outlets. Premium partner contracts are being shortened to one year as Apple trims its network and deepens engagement with scaled partners and more direct billing relationships.