By Aditya Kalra

NEW DELHI (Reuters) - Alphabet Inc's ( GOOG ) Google is close to deciding on locations in its key market of India where it will open its first physical retail stores outside the United States, three sources familiar with the matter said.

Google counts India as a key growth market, where it has committed to investing $10 billion. It currently has only five physical stores, all in the United States, which sell its products such as Pixel phones, watches and earbuds.

It is aiming to mirror a retail approach that helped Apple Inc ( AAPL ) rake in billions of dollars in the last two decades by showcasing its own products. Apple ( AAPL ) has 500 plus stores worldwide.

Google is in advanced stages of finalising locations in or around the capital of New Delhi, and the financial capital Mumbai, said three sources, who declined to be named as the process is confidential.

Google declined to comment on the matter.

The first source said the stores are likely to be around 15,000 square feet, and will take at least another six months to open, though the timeline could change.

The IT hub of Bengaluru in south India was also considered, but New Delhi and Mumbai are the frontrunners, the person added.

"The idea is to compete with Apple ( AAPL ) ... especially to target the luxury segment," said the person, adding more stores will be considered if the initial ones do well.

Google currently sells it products in India through authorised retailers, as does Apple ( AAPL ). But in 2023, Apple ( AAPL ) CEO Tim Cook visited India to open its first company-run stores in Mumbai, and then in New Delhi.

Pixel phones in India cost from about $370 to $2,000 for top-end models. Apple's ( AAPL ) iPhones cost from about $520-$2,130. Google has also started making Pixel smartphones in India.

In 2024, Apple ( AAPL ) dominated the local market for premium phones, priced above $520, with a roughly 55% share, compared with Pixel's 2% share, research group Counterpoint said. The fast-growing Indian market has about 712 million smartphone users currently.

Google's plan to open the stores is firm and will be executed soon, there are some standard regulatory and compliance processes to clear before the stores can be set up, said the second source, without elaborating on the issues.

A third source said one of the possible locations Google is considering near New Delhi is in the satellite city of Gurugram, where many global corporations such as Uber and Meta have offices and the likes of Uniqlo have retail outlets.

In India, Google is battling many regulatory and legal challenges. Among them are ongoing antitrust cases related to its in-app billing system and abuse of market position in the market for smart TVs.

In a top-level departure, Google lost its India head of public policy this month, marking the second departure in around two years from the critical role which is key to government engagement.