India has just struck Apple another harsh blow by raising its duty on imported mobile phones from 15 percent to 20 percent.
The move, which will make imported iPhones more expensive, follows less than two months after the country raised the import duty from 10 percent to 15 percent. It comes at a time when Apple is trying to grow its market in the world’s fastest-growing smartphone market.
Apple has been negotiating with the Indian government from lower tariffs on certain components, but the increased duties — which were announced as part of India’s budget on Thursday — show that India is instead headed in the opposite direction.
The increase on import duties is designed to promote local manufacturing. Already, India requires that foreign manufacturers source 30 percent of their product domestically if they wish to set up single brand retail stores in the country. This has hurt Apple’s ambitions to open an Apple Store in India.
Building iPhones in India
Last year, Apple supplier Wistron started producing iPhone SE models in India. This week, we reported that the supplier is now close to agreeing a deal that will allow it to expand its manufacturing to begin building iPhone 6s handsets in India as well.
While both of these moves are good news for Apple, the increased import duties are going to necessitate Apple raising the prices of its higher-end iPhones, just as it did following the previous import duty hike.
That’s ultimately going to hurt Apple’s market share in India.