Apple may face even higher iPhone taxes, import restrictions in India market

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in iPhone
Apple may face tougher trading conditions in India in the future, after a top advisor to Prime Minister Narendra Modi insisted the country should restrict its import of luxury goods like the iPhone and tax them heavily, instead of raising interest rates to bolster the rupee.

Apple CEO Tim Cook with Indian Prime Minister Narendra Modi in 2017
Apple CEO Tim Cook with Indian Prime Minister Narendra Modi in 2017


In an interview, the Economic Advisory Council member Rathin Roy insisted the government needs to make it less appealing for the country's citizens to enjoy luxury goods, reports Bloomberg. "We need to actively send signals to disincentivize or discourage increase in consumption of what I describe as explicit luxuries," the adviser proclaimed.

These explicit luxuries include the iPhone, which Roy noted had seen increases in imports to India in recent times. As another example of luxury-based spending, Roy suggested the expenditure on overseas education and other services have also increased.

Roy's comments follow after an announcement by India's government on Wednesday that it had raised import taxes on a variety of goods, including jewelry and footwear, by $12 billion. The iPhone and similar goods have a good chance of being hit by future import tax rises, as electronics and gold are the country's biggest imports behind oil.

The four-year high of Oil is said to be making global funds nervous, groups who pulled $2.45 billion from local bonds and stocks in September 2017. Those withdrawals are claimed to have helped reduce the value of the rupee to record lows, making it the worst-performing currency in Asia according to economists.

A Bloomberg survey of economists reveals most would call for a 25-basis-point rate hike by the central bank, but Roy dismisses this, suggesting it isn't the right answer to fix the currency's poor situation. The government has also fought off attempts to short the currency, with measures to improve cash availability with banks forming part of the countermeasures.

The luxury goods rate increases would follow a similar path taken by Indonesia, another country with a current-account deficit. In Indonesia's case, the country took the opportunity to delay "import-heavy infrastructure projects" as well as increasing taxes on luxury goods imports.

While Roy's advice will be heard by Prime Minister Modi, it remains to be seen if it will be adopted by the country in the coming months as it tries to rectify the rupee. If India adopts the recommendation, Apple's existing efforts to increase sales in the country may be hampered.

Apple is currently awaiting permission to open full corporate-run retail outlets in the country, and has looked into opening premium franchise-owned outlets as a temporary measure. It may also be able to counter some of the import tax rises by expanding its existing iPhone production operations with assembly partner Wistron, which it uses to make the iPhone 6s for local sale.

Apple lost three local executives earlier this year, which the company replaced in August with a new head of operations. Michel Coulomb is reportedly pursuing an aggressive strategy to resuscitate iPhone sales, which have apparently dwindled to just 1 percent of the market.

A fight with the Telecom Regulatory Authority of India (TRAI) is an even bigger threat to its efforts, with a potential ban of iPhones from the country's mobile networks on the cards if the company does not comply with laws mandating the installation of an official anti-spam app. It is expected that Apple and the regulator will be going to court over the matter.

Comments

  • Reply 1 of 16
    JWSCJWSC Posts: 275member
    The epic economic mismanagement of the Indian economy continues.  Apple needs to keep expectations low here for the foreseeable future.

    I wonder what council member Rathin Roy uses for his personal mobile phone?  Just wondering if it’s a ‘do as I say, not as I do’ scenario.
    entropysolsjbdragondarkvadermuthuk_vanalingam
  • Reply 2 of 16
    lkrupplkrupp Posts: 6,621member
    Pretty smart on the part of India. They know Apple needs them more than they need Apple. Apple will be willing to do almost anything to break into that giant market potential. So put the screws to Apple and milk ‘em as much as you can. Apple will probably sell its privacy soul like they did in China to get into the India market.
  • Reply 3 of 16
    Pretty stupid on the part of India. They don't get that Apple doesn't need them as much as they need Apple.

    They'll get a trickle of government income by taxing "luxury" goods, but lose the productivity enhancement that comes with opening the doors to cooperation. Slicing their noses off to spite their face, IMHO.
    radarthekatjbdragondarkvader
  • Reply 4 of 16
    JWSCJWSC Posts: 275member
    lkrupp said:
    Pretty smart on the part of India. They know Apple needs them more than they need Apple. Apple will be willing to do almost anything to break into that giant market potential. So put the screws to Apple and milk ‘em as much as you can. Apple will probably sell its privacy soul like they did in China to get into the India market.

    A bit harsh IMO.  AFAIK Apple has relocated their servers to China to support Chinese users with no backdoor for the PRC.  Don’t see any issues there.  Apple has removed apps supporting VPN from the Chinese App Store.  Less good but not exactly selling its ‘privacy soul.’

    I’m struggling with the comparison of India and China.  The Chinese economy has a lot of flaws.  But it’s economy is highly dynamic in a way India can only dream of right now.  I find little that could be considered ‘smart’ about how the Indian government has been handling their economic affairs in recent years.

    edited October 2018 radarthekatolsjbdragon
  • Reply 5 of 16
    Apple has been accommodating producing IPhone’s locally.  

    If that’s no longer good enough India’s facing major problems that have nothing to do with Apple.

    Is any import going to considered a “luxury good”?

    I suspect unsustainable population growth, and uneven distribution of wealth is causing systemic problems.

    China addressed their population growth problem decades ago, India didn’t and it’s resulting in growing instability.

    Traditionally the way to deal with this (population) is wars, but everyone around India is a nuclear power.  

    It feels like India is reverting to a 3rd world nation...  they took advantage of exported services, but missed the boat on the rest.

    “The major exports from India are engineering goods, refined petroleum, gems, jewelry, chemicals, agricultural products and textiles, the major Indian imports were crude petroleum, gold, coal briquettes, diamonds and petroleum gas.”

    They’ve also been exporting their best and brightest.


    jbdragonracerhomie3darkvader
  • Reply 6 of 16
    JWSC said:
    The epic economic mismanagement of the Indian economy continues.  Apple needs to keep expectations low here for the foreseeable future.

    I wonder what council member Rathin Roy uses for his personal mobile phone?  Just wondering if it’s a ‘do as I say, not as I do’ scenario.
    Hey JWSC, I was curious too, so I used the Echofon twitter app and you can see that he uses Twitter for iPhone. 

    Hypocrisy has a name, it appears to be Rathin Roy.  

    I’ve attached a screenshot.
    edited October 2018 JWSCjbdragonracerhomie3acejax805
  • Reply 7 of 16
    Swiss watch exports to India have markedly increased as well. I wonder if they'll be targeted next?


    racerhomie3
  • Reply 8 of 16
    jbdragonjbdragon Posts: 1,966member
    Well India can do what it wants. If it wants to tax the crap out of the iPhone so be it. BUT, The U.S. has every right to throw on huge tariffs for any India products going to the U.S. They want to F us, well we can F them right on back. Fair and equal trade.

    It's a very corrupt country. A whole lot of them are trying to pull scams on the phone on American Citizens out of their money. They seem as clueless there as politicians here are. Raise taxes on this or that, and it's going to being in this much more money. What is the end result? It brings in less money and puts people out of work as people will just spend less money and not buy it. If people aren't buying it, you're not getting any taxes from it. So not it's NOTHING instead of something in taxes. Your tax hike just killed a little more of the economy. Quite frankly, the Government could tax everyone 100% of their money and it still wouldn't be enough as they'd a bunch more ways to waste it all.

    So keep it up India and continue to live like a 3rd world country where people want to flee from.
    edited October 2018 racerhomie3
  • Reply 9 of 16
    foggyhillfoggyhill Posts: 4,767member
    Modi is heading India towards authoritarianism and graft and corruption in India has been on the way up. So, that just means they want to be greased even harder.
    The Indian market is very heavily protected by tariffs which means Indians have to pay an exorbitant price for extremely shoddy goods (that's what the lack of competition means). Supposedly tariffs protect the small players but in fact its a gift to the big companies who have complete control of the Indian market and can charge whatever they want. Only the richest or the rich can afford the to buy the highest quality goods from all sources . 
    edited October 2018 muthuk_vanalingam
  • Reply 11 of 16
    Please India, don’t turn into Pakistan.
    In the future Indians should be taxed at 100% for Modi’s Make in India plans.
  • Reply 12 of 16
    sacto joe said:
    Pretty stupid on the part of India. They don't get that Apple doesn't need them as much as they need Apple.

    They'll get a trickle of government income by taxing "luxury" goods, but lose the productivity enhancement that comes with opening the doors to cooperation. Slicing their noses off to spite their face, IMHO.
    LoL what makes you think India needs Apple in any way?
    edited October 2018
  • Reply 13 of 16
    India has an election coming up next year.

    Hopefully the people will realize what a horrible mistake they made with Modi, and toss him out.

    And I'm not talking about Apple here, I'm talking about how absolutely horrible he is for the country.  Religious extremists do not belong in government, no matter what religion it is.  And he's intent on wrecking the economy.
    muthuk_vanalingam
  • Reply 14 of 16
    JWSC said:
    The epic economic mismanagement of the Indian economy continues.  Apple needs to keep expectations low here for the foreseeable future.

    I wonder what council member Rathin Roy uses for his personal mobile phone?  Just wondering if it’s a ‘do as I say, not as I do’ scenario.
    foggyhill said:
    Modi is heading India towards authoritarianism and graft and corruption in India has been on the way up. So, that just means they want to be greased even harder.
    The Indian market is very heavily protected by tariffs which means Indians have to pay an exorbitant price for extremely shoddy goods (that's what the lack of competition means). Supposedly tariffs protect the small players but in fact its a gift to the big companies who have complete control of the Indian market and can charge whatever they want. Only the richest or the rich can afford the to buy the highest quality goods from all sources . 

    darkvader said:
    India has an election coming up next year.

    Hopefully the people will realize what a horrible mistake they made with Modi, and toss him out.

    And I'm not talking about Apple here, I'm talking about how absolutely horrible he is for the country.  Religious extremists do not belong in government, no matter what religion it is.  And he's intent on wrecking the economy.

    I am from India and I agree with the above comments. The larger question remains - Do majority of Indians understand this? I don't know an answer to that question right now. We will come to know about it in another 8 months (May-2019 elections). Our PM Modi has been a divisive force, so I won't be surprised if some of the long timers (AnantKSundaram, BestKeptSecret etc) from India in this forum disagree with me and above comments.


    We (people of India) are a long way to go in terms of maturity in upholding/implementing the spirit of democracy. Recently our Supreme court made very good verdicts on contentious issues (decriminalizing homosexuality, adultery as crimes), but MAJORITY of the people are criticizing the Supreme Court, without even understanding what the cases were about and what was the rationale behind SC's verdict. So it is going to be a long journey towards change for the better in my country.

    avon b7JWSC
  • Reply 15 of 16
    lkrupp said:
    Pretty smart on the part of India. They know Apple needs them more than they need Apple. Apple will be willing to do almost anything to break into that giant market potential. So put the screws to Apple and milk ‘em as much as you can. Apple will probably sell its privacy soul like they did in China to get into the India market.
    There is a HUGE difference between China and India when it comes to dealing with Apple. China is an extremely important market (within Top 3 in revenue/profits) for Apple while India is NOT an important market YET. It might become an important market for Apple after 10 years or 20 years. Or it may never happen. Talking about Future is all speculation, right? So Apple wouldn't give as much leeway to Indian government as they do with Chinese government when it comes to dealing with various issues for the near term (2-5 years).
  • Reply 16 of 16
    dasanman69dasanman69 Posts: 12,972member
    lkrupp said:
    Pretty smart on the part of India. They know Apple needs them more than they need Apple. Apple will be willing to do almost anything to break into that giant market potential. So put the screws to Apple and milk ‘em as much as you can. Apple will probably sell its privacy soul like they did in China to get into the India market.
    sacto joe said:
    Pretty stupid on the part of India. They don't get that Apple doesn't need them as much as they need Apple.

    They'll get a trickle of government income by taxing "luxury" goods, but lose the productivity enhancement that comes with opening the doors to cooperation. Slicing their noses off to spite their face, IMHO.
    So which is it, smart or stupid? I guess we'll have to wait and see for ourselves 
    edited October 2018
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