24/7 Wall St.

India is the world’s second-largest country and the largest where a large proportion of its population has yet to acquire smartphones. The installed user base is reported to top 300 million, but that still leaves another billion or so potential customers.

Apple Inc. (NASDAQ: AAPL) has not fared well in the Indian market share wars, even though the company reportedly sold 2.5 million iPhones in India in 2016, according to a report from Counterpoint Technology Market Research.

Counterpoint said that India’s smartphone user base grew 18% in 2016 to top 300 million. A back of the envelope calculation would indicate total 2016 sales in the country came in at around 46 million smartphones. Apple’s share of that is about 5.4%.

The company’s share of the high-end (priced at $450 or higher) smartphone market, however, is an impressive 62%. In the fourth quarter of last year, Apple made a third of its total annual sales and ranked 10th in fourth-quarter market share. Samsung (24%), Vivo (10%) and Xiaomi (9%) were the fourth-quarter market share leaders.

As mediocre as that may sound, at the end of the second quarter of last year Apple’s total sales in India totaled just 800,000 units, and reaching 2.5 million for the year from that point was a pretty good performance.

The company has begun negotiations with the Indian government to open an assembly facility in the country. That would give Apple a base from which to build out retail stores and build its brand, ideally attracting more buyers for its high-priced iPhone. In exchange, Apple wants a 15-year tax holiday on imported components and equipment.

Apple’s main manufacturing partner, China’s Foxconn, has a plant in India but does not build any iPhones there. Another former Apple partner, another Chinese firm named Wistron, is expanding its New Delhi facility and getting ready to break ground in April on a new plant in Bangalore.