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Customs Duty on Mobile Phones Won't Increase iPhone Prices in India

Customs Duty on Mobile Phones Won't Increase iPhone Prices in India

By Manish Singh | Updated: 4 July 2017 16:13 IST

As Apple looks for different ways to turn India into its next major market, the company may have found a stop gap solution: dropping the iPhone prices.

Apple took many by surprise last week when it quietly slashed the sticker price of various iPhone models and other products in India. As a result, every iPhone model launched in the last two years has now officially become more affordable, with some getting a price cut of up to Rs. 5,000 ($77).

Apple’s move is especially remarkable because it comes at a time when several other international giants are expected to revise their strategy for the Indian market to make their phones a little costlier.

Last week, the Indian government levied a basic customs duty of 10 percent on mobile phones and other unspecified electronics, as well as certain accessories.

The move, which is an attempt to further support local companies, is expected to impact phone makers such as Apple and Lenovo as well as Indian manufacturers such as Micromax, which still rely on importing phones in the nation. These companies, analysts said, could soon raise prices of their phones to reflect the change.

When that happens, you won't find iPhones' prices going up again. The company took the Indian government’s move last week into consideration when slashing the price of iPhones, MacBooks, and Apple Watch models, a person with direct knowledge of the matter said.

The iPhone-maker’s move could give it the boost it has been scrambling for in the nation, analysts said. "I think it’s a good move ahead of upcoming festive season. We believe the best way for Apple to increase their share in India is to bridge the gap between affordability and aspirational value of the iPhone," Tarun Pathak, a senior analyst at Counterpoint Research told Gadgets 360 in a statement.

Apple sees a huge potential in India, Tim Cook has said at company’s recent earnings calls. But even as Apple ramps up its efforts in the country, it still has much of the work left. Apple currently assumes only three percent of the market share by volume, and 11 percent by value, according to data provided by Counterpoint.

Last month, the company began manufacturing iPhone SE models in India in limited quantities. Once ramped up, this would allow Apple to bypass import duties imposed on mobile phones.

Until Apple finds a feasible way to make iPhones more affordable in India, its current price revision should it keep going.

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