India hikes import tax on cellphones, liable to hit Apple's iPhone hardest
The Indian government is raising import taxes on cellphones from 10 to 15 percent, which could put pressure on Apple to accelerate local iPhone manufacturing.
The shift comes as part of a general hike on import taxes, including a similar increase on video cameras and a TV tax doubled to 20 percent, Reuters reported. Indian Prime Minister Narendra Modi has championed a "Make in India" program designed to spur local manufacturing.
Conterpoint Research notes that while 8 out of 10 phones sold in India this year were made locally, about 88 percent of Apple's iPhones are imported, since only the SE is assembled in the country. Most of company's assembly work happens in China.
Apple is likely to raise prices on iPhones to compensate -- a serious matter, given that even the SE is too expensive for most Indians. Over 75 percent of smartphones sold in the country cost less than $250, and the iPhone has a marginal share of the local market.
The company has pursued a variety of concessions and financial handouts in exchange for growing local manufacturing. The Indian government, though, has allegedly held fast and refused to offer Apple anything unavailable to other multinational businesses.
Apple is rumored to be working on an "iPhone SE 2,", which could be assembled in India like its predecessor. The device could ship in the first half of next year, and include upgrades like an A10 Fusion processor and a 1,700 milliamp-hour battery, but will probably forego features like wireless charging and the iPhone X's Face ID.
The shift comes as part of a general hike on import taxes, including a similar increase on video cameras and a TV tax doubled to 20 percent, Reuters reported. Indian Prime Minister Narendra Modi has championed a "Make in India" program designed to spur local manufacturing.
Conterpoint Research notes that while 8 out of 10 phones sold in India this year were made locally, about 88 percent of Apple's iPhones are imported, since only the SE is assembled in the country. Most of company's assembly work happens in China.
Apple is likely to raise prices on iPhones to compensate -- a serious matter, given that even the SE is too expensive for most Indians. Over 75 percent of smartphones sold in the country cost less than $250, and the iPhone has a marginal share of the local market.
The company has pursued a variety of concessions and financial handouts in exchange for growing local manufacturing. The Indian government, though, has allegedly held fast and refused to offer Apple anything unavailable to other multinational businesses.
Apple is rumored to be working on an "iPhone SE 2,", which could be assembled in India like its predecessor. The device could ship in the first half of next year, and include upgrades like an A10 Fusion processor and a 1,700 milliamp-hour battery, but will probably forego features like wireless charging and the iPhone X's Face ID.
Comments
It's crazy enough that it might just work!
In that case it only make sense for Apple to pay the Import tax and do nothing with India.
It appears Apple will just have to put factories in India to get the tax break even though hardly anyone in India is going to buy iPhones. India is the land of Android smartphones and nothing is going to change that. It doesn't seem as though Apple is going to make any decent amount of money from Indian consumers, so it's all a waste of time and effort. Apple is just going through the motions to not ignore India. I'm not knocking India. It's just that they're not economically caught up with many other nations. Consumers should buy what they can afford and Android smartphones are basically what most Indian consumers can afford.
Apple cant win this, it just has to pull out.
Remember that Android iPhones are also going to go up in price. Not just the import tax but the component tax, if any are being made in India.
The idea is to replicate the Chinese or broader asian supply chain for smart phones in one country. Cant see that working. If it starts to work then Apple can fish in that supply chain but it can do nothing now.
Apple's main problem seems to be price. They have nothing 'new' and priced for that market. It looks like the most attractive options are the SE, 6 and possibly 7 but if they have to up the price on the 6 and 7 they will be older and more expensive phones having to compete with the likes of Honor who already manufacture some models in India.
If Apple can somehow make manufacturing cheaper or on a par with China then that's a different story as they could use those phones in other markets and gain protection from political or geological instability.
https://www.gadgetsnow.com/tech-news/heres-what-apple-ceo-tim-cook-said-about-india-during-the-companys-earnings-call/articleshow/59879559.cms
Heres a list of Apple suppliers.
https://images.apple.com/supplier-responsibility/pdf/Apple-Supplier-List.pdf
It doesnt look like China expects phones to be both assembled and components sourced in China. At least I am not aware of any tax on supplier imports.
So this is chicken and egg. If most of those suppliers opened plants in India, Apple could assemble its Indian line (or general line) of iPhones from the same suppliers. However they probaly wont set up there unless Apple or other companies push them.
Edit:
Actually Samsung do have a Chinese plant.