Apple continued to see a drop in iPhone sales, which resulted in a second quarterly decline in profit. Sales of the iconic iPhone dropped 21% sequentially.

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The company said that it sold 40 million iPhones in the third quarter ended June 30, 2016, and earned a revenue of $24 billion. Unfortunately, the revenue fell 27% on a sequential basis and 23% from the same period a year ago.

One of the reason was Apple's declining revenues from China. Revenue from "Greater China" slumped 33% from a year ago to $8.8 billion, the company said.

"Samsung and Huawei are much more competitive now versus a year ago and the Chinese economy is not doing well at all, all potentially contributing to the decline. Apple is clearly investing in India to diversify their emerging region performance,” Patrick Moorhead of Moor Insights & Strategy told PTI.

However, the bright spot for Apple has been India as its sales have been growing.

"India is now one of our fastest growing markets. In the first three quarters of this fiscal year, our iPhone sales in India were up 51% year-on-year," Apple CEO Tim Cook said on an investor call.

He added that the tech giant is "looking forward" to setting up retail stores in India to tap into the booming smartphone market here.

The company has announced the setting up of a design and development accelerator to support Indian developers creating innovative applications for iOS and opened a new office in Hyderabad to accelerate maps development, Cook said.

"We're looking forward to opening retail stores in India down the road, and we see huge potential for that vibrant country," he said without disclosing further details.

Cook, who visited India in May, had discussed issues including manufacturing and setting up retail stores in the country with Prime Minister Narendra Modi.

"On a personal note, during the past quarter I visited China and India, and I am very encouraged about our growth prospects in those countries," he said.

Recently the government issued new norms allowing single-brand retail and an exemption from local sourcing for 'state-of-the-art' and "cutting edge" technology with a waiver for three years, and the option to extend it for five years.

According to PTI's sources, Apple may have to submit a fresh application for it.

The Cupertino-based tech giant had on Tuesday reported its revenues rising to $42.4 billion in the third quarter, driven by markets including India, Russia, Brazil, Turkey and Canada. 

(With inputs from PTI)