Raised taxes on imported smartphones have increased the iPhone X price in India.
Higher iPhone Prices
With the recent release of the current generation of Apple’s new phones, the iPhone 8, 8 Plus, and especially the iPhone X have taken the world by storm. With unique FaceID technology, the iPhone X has offers consumers something different in a sea of smartphones that tend to just upgrade their power once a year. While increased specifications are no doubt important as technology advances, it seems that fewer and fewer companies are innovating when it comes to luxury phones. While the new iPhones are a big deal worldwide, it may be unattainable for the majority of Indians after a bump in the iPhone X price in India.
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A recent tax hike in the country that applies to imported smartphones has impacted the price of Apple’s newest phones. In an effort to keep business local, every model except the locally produced iPhone SE has had taxes raised by an average of 3.5%.
While it’s an understandable decision by the Indian government, it raises the price of an already exorbitantly expensive phone in a country in which Reuters reports that Apple only has a 3% market share.
“[Apple’s] priciest iPhone X model now costs 105,720 rupees ($1,646.61) for a 256 gigabyte (GB) variant, according to Apple’s India website, an increase of 3.6 percent. The price of a 256 GB iPhone 8 has risen by 3.1 percent to 79,420 rupees.”
An iPhone X price in India of over $1600 makes the phone over 50% more expensive than it is in the United States, in a country with far less purchasing power and an overall much poorer population. Further restricting phones like the iPhone X to an incredibly small percentage of smartphone users may make business difficult for Apple in such a large market that they continue to struggle to break into.
Trouble For Apple
The import tax hike on imported iPhones from 10% to 15% hits Apple much harder than it has competitors like Samsung. Apple only produces the mid-range iPhone SE in the country, while Samsung has a local production of almost every one of their models sold in India. It’s a market already dominated by Android phones, and this change pushes the competition even more towards Samsung’s favor.
Despite the iPhone SE being the only Apple phone that hasn’t been hit by the tax increase, 9to5Mac reports that 9 out of 10 iPhones sold in India are imported. The fact that Apple’s tiny market share in the country is made up almost entirely out of these luxury flagships will certainly hurt their business in India significantly.
Previously, Apple has stated that they’d like to expand their manufacturing presence in the country, which would lead to an overall lower iPhone price in India, but rolling out new infrastructure takes time. Despite requests from the company asking the Indian government to delay the tax increase while they try to move more manufacturing to the country, it seems that the tax hikes will move forward as planned.
Smartphones in India
Indian consumers are a large smartphone market, as one of the largest countries in the world. While still behind Western markets when it comes to adoption of technology, the country is quickly emerging as an area with substantial demand for smartphones. As many in India rely on smartphones as their primary method of internet access and entertainment, a lot of consumers turn towards mid-range smartphones with large screens that are perfect for watching videos.
The iPhone SE, while less expensive than the luxury models, is also significantly smaller than mid-range devices from the likes of Samsung. This drawback will definitely hurt Apple’s more affordable offerings in the country, as the SE doesn’t necessarily suit the needs of the average Indian smartphone user. As mentioned above, the majority of iPhones currently used in India are imported, which reinforces the fact that Indian consumers are looking for something different when it comes time to buy a smartphone.
If Apple is able to quickly shift their manufacturing of high-end iPhones to be based in the country, they may be able to salvage the small portion of the market that they currently possess. However, as the government decides to prioritize local business and the iPhone X price in India increases, it could pose a serious threat to Apple’s already precarious position. Although 3% is a small portion in the grand scheme of things, in a country as large as India, it’s still a significant amount of customers that are worth catering to. The onus is on Apple to adjust to these new tax hikes and avoid alienating a customer base that already largely swings towards Android manufacturers like Samsung.