Indian Government’s Move to Increase Import Tax on Smartphones Will Negatively Affect Apple

In a bid to promote its Make in India initiative and encourage more OEMs to produce and assemble their products locally, the Indian government has hiked the import taxes on mobile phones and other electronic devices. On mobile phones, the import duty has been increased from 10 percent to 15 percent.

The move will impact Apple the worst as it imports around 88 percent of the devices it sells in India. Apple only assembles the iPhone SE in India at a plant outside of Bengaluru operated by its supply-chain partner Wistron. However, it continues to import other products in the country. Apple did ask the Indian government for a variety of tax breaks so that it could set up an iPhone manufacturing plant in the country but talks between both parties are still ongoing.

“It will impact Apple the most as the company imports 88 percent of its devices into India. Either this will lead to increase in iPhone prices or force Apple to start assembling more in India.” – said Tarun Pathak, associate director at Counterpoint Research.

The Indian government has also doubled the import tax on televisions to 20 percent and increased the import tax on video cameras to 15 percent. The move will greatly benefit OEMs who are locally assembling or manufacturing their products in India, including Samsung which assembles the majority of the handsets it sells here. These OEMs can price their product significantly lower or enjoy a higher profit margin compared to Apple and other vendors who import the majority of the product they sell in India.

[Via Reuters]