Import taxes could make iPhone even more expensive in India

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iPhone India
Apple faces an uphill battle to get the iPhone into customers' hands in India.
Photo: Ste Smith/Cult of Mac

Apple may be keen to grow its business in India, but it’s certainly not getting any favors from the government.

In a new ruling, it’s been announced that the import tax paid on smartphones is being raised from 10 to 15 percent in a decision that will hurt Apple’s business in the country. Unless Apple absorbs the cost itself, this will make its iPhones more expensive at a time when it is desperate to get more handsets into customers’ hands.

Pankaj Mohindroo, president of the Indian Cellular Association, said on Friday that the hike in tax will boost domestic manufacturers.

“[This] will impact Apple the most as the company imports 88 percent of its devices into India,” Tarun Pathak, an associate director at Counterpoint Research, additionally told Reuters. “Either this will lead to increase in iPhone prices or force Apple to start assembling more in India.”

Apple’s manufacturing in India

Apple manufacturer Wistron started making iPhones in India earlier this year, and has recently attempted to expand its manufacturing in the country. Along with Wistron, other Apple manufacturers Foxconn and Pegatron are also reportedly looking to expand their manufacturing presence in India.

While Apple is undoubtedly keen to grow its market in India, it has had multiple stand-offs with the government, most recently regarding a possible exemption to the 10 percent import duties it pays on components shipped to India for final assembly. (While it’s not spelled out, today’s report makes it sound as though the 15 percent tax is due only on completed smartphones, meaning that the 10 percent component tax would stay the same.)

Apple has also experienced a long, drawn out struggle in India to gain the necessary permissions to open a major Indian flagship retail store in the country.

Aside from phones, the Indian government also announced that the tax on imported video cameras will rise from 10 to 15 percent, while the import duty on television sets increases from 10 percent to 20 percent.