Editors' pick: Originally published Feb. 17.

For years, Tim Cook has argued that India is Apple's (AAPL)  next big emerging markets growth opportunity as its huge population, growing middle class and 4G network rollouts create a large base of consumers able and willing to buy a high-end smartphone. But compared with the tremendous success seen in China, the going has been fairly slow thanks to economic and other factors.

Apple's reported plans to manufacture its 4-inch iPhone SE in India could give these efforts a boost, while also allowing the company to diversify its manufacturing base a little at a time when trade tensions with China appear set to escalate.

India's Economic Times reports Apple plans to have the iPhone SE, which features a $399 starting price in the U.S., produced by Taiwanese contract manufacturer Wistron in the Indian IT hub of Bangalore. Notably, Apple is reportedly likely to push forward with the plant without waiting for the Indian government to sign off on tax breaks and other concessions it had sought.

In late January, The Wall Street Journal reported that Apple is closing in on a deal to manufacture unspecified goods in India, while quoting a government official as suggesting many of the company's incentive demands are "workable." Apple was said to be seeking a 15-year tax holiday on component and equipment imports.

Tax holiday or not, there's another big incentive for Apple to manufacture iPhones in India: Locally-produced phones aren't subject to the tariffs (generally around 10-12%) applied to imported devices. That's a big deal in a country where the nominal per capita income is still only around $1,600 -- less than one-fifth of China's $8,100 -- and an estimated 70-80% of phones sell for less than 10,000 rupees ($149).

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The cost-sensitivity of the Indian market is a big reason why Apple still is only one of the market's top-five smartphone vendors, per IDC. The research firm estimates Samsung led the market with a 25.1% unit share, and was followed by China's Xiaomi, Lenovo, Oppo and Vivo.

With the government's demonetization efforts weighing on consumer spending, smartphone shipments were nearly flat annually at 25.8 million. For the whole of 2016, they grew a modest 5.2% to 109.1 million -- a substantial number, but much less than the 467.3 million smartphones IDC believes were shipped in China, where Apple was the 4th-biggest vendor on a unit basis and perhaps the leader on a revenue basis.

On the bright side, IDC's numbers do suggest Apple has plenty of room to grow in India via both share gains and higher penetration rates. That is, if the company can hit the right price points and convince more middle-class Indians it's worth paying a premium for the iPhone's features, user experience and app/service ecosystem.

During Apple's January 31 earnings call, Cook mentioned Apple achieved record Indian sales during the December quarter, and that local Mac and iPad sales were up double-digits (nothing similar was said about iPhone sales). He also promised Apple would "invest significantly" in India, and said it's "in discussions on a number of things" in the country, including retail stores.

Aside from being able to sell iPhones more cheaply, Apple, whose brand still isn't nearly as powerful in India as it is in China, would get a nice local PR boost from manufacturing goods at a Bangalore plant. It also might be able to obtain lower labor costs than in China, where wages have risen substantially over the last several years.

But there are also some big challenges involved in moving iPhone manufacturing away from China. The size of the Chinese labor pool that Apple's contract manufacturers can tap on demand -- not just assembly line workers, but also engineers and technicians -- gives it a big incentive to keep the lion's share of iPhone production in the Middle Kingdom. So does the fact that so many plants from other supply chain partners are located in China.

That's probably why we aren't seeing any reports about Apple manufacturing its flagship iPhones in India. And why -- in spite of President Trump's push to get Apple to manufacture iPhones in the U.S. and speculation that Foxconn will soon make big U.S. investments -- CFO Luca Maestri recently downplayed the likelihood of Apple shifting much of its manufacturing to the U.S., noting the iPhone's supply chain is largely in Asia.

But compared with flagship models, manufacturing the SE somewhere other than China could be a little easier, since it relies heavily on components and manufacturing processes previously used by other iPhones. And compared with the U.S., India is fairly close to supply chain partners operating out of China, Taiwan, Japan and South Korea.

With global smartphone shipment growth having slowed to a single-digit pace and Chinese iPhone sales pressured by intense competition, there's plenty of incentive for Apple to step up its investments in emerging markets with low iPhone penetration rates. In most cases, it won't make sense to set up a local iPhone factory as part of the effort, but India is arguably an exception.