EVERY year in September, Apple launches its flagship product, the iPhone, in a much-awaited launch event. This September, Apple has launched four new models in the iPhone 13 line-up – iPhone 13, iPhone 13 Pro, iPhone 13 Pro Max and the iPhone 13 Mini – which go on sale in India today. The lowest price range starts at 69,900 Rupees for the iPhone 13 Mini.
Moreover, the pro versions of the iPhone 13 have a price hike of over 60 percent in India as compared to the US.
This is not the first time that iPhones are costlier in India as compared to other nations.
Since 2008, iphones have consistently been sold at lower rates in the US than in India when converted to rupees.
So what makes iPhones so popular – and also so expensive in India?
No Manufacturing Unit
Apple does not have a local manufacturing unit in India. Hence, iPhones are imported items that come with taxes and customs duty charges.
The basic customs duty of 20 per cent and a 2 percent cess which is a tax on tax is applied.
So for any iPhone that gets imported, there is almost 22.5% of customs duties on the Smartphone.
Goods & Services Tax
The rate of GST on mobile phones and accessories was increased to 18% from 12% with effect from 1st April 2020. This resulted in a hike of 5 percent in the prices of iPhones in India.
At current rates, the GST on iPhone 13 stands at about Rs 10,662.
All these taxes levied on the iPhone have to be borne by its customers.
Apple can have its own manufacturing plant in India. However, some restrictions from the Indian government policies make it arduous for the brand to do so,in spite of having a huge market base.
Apple sells its products in India through a very large third-party retail network.
Despite having its own stores in India, third-party vendors are vital for Apple. Even Apple’s official online stores in India are dependent on third-party vendors for distribution.
And, these middlemen make profits of their own.
Other Android smartphone companies also import their devices in India, but they are not that costly.
A foreign exchange loss occurs when a company buys or sells goods and services in a foreign currency, and that currency fluctuates relative to their home currency.
Thus, foreign exchange losses generally play a role in deciding the prices of a commodity.
Most of the smartphone companies absorb these losses and don’t pass it on to the customer. However, that’s not the case with Apple. The brand has a strict policy of maintaining the margins.
INR has depreciated significantly against USD and its effect is clearly visible on the price of iphones.
That’s precisely why iPhone is expensive in India and relatively cheaper in countries like Japan and Dubai.