Owning an iPhone in India has always been a luxury. According to a report from Deutsch Bank, India is the most expensive places in the world to buy an iPhone and because of this very reason, iPhones have never topped any sales records here in the country.
There’s no arguing that Apple uses the best materials on all its product lineup and hence the price of these phones are always on the highr side. But especially in India, here’s what makes them even more expensive :
Custom duty is a sort of an indirect tax which is imposed on both exported and imported goods and services. The tax imposed on the import of goods is known as the import duty. Whereas, the tax imposed on the export of goods is known as the export duty. On an average, the total amount of custom duty charges on Apple products in India is close to 11.43% which includes shipping and handling charges.
This is a huge cost determining factor and this is the reason why brands like Xiaomi, OnePlus and Samsung have started some degree of manufacturing in India itself.
Then comes the taxes, which are levied on every item that ships with the product, for example, if the box contains a pair of earphones, a charger, a wire, etc , then there would be an individal tax on every item which would ship along and the range of these taxes can be from 12%-18% (individually).
These all are just the first leg of taxes that are paid to central government. Apart from these manufacturers have to pay separate taxes to the state governments where they’ll be selling their respective products.
3.Lack of Local manufacturing
Apple has a wide variety of suppliers panned across 28 different countries. Each individual part that goes into the phone might have a different supplier from a different country. This results in a dual effect
- Helps Apple to get the best materials at the best price, lowering the BOM (Bill of Materials) .
- Increases the dependency on multiple supply chains.
In the case of India, comes our FDI (Foreign Direct Investment) policy, which states that any brand has to source atleast 30% of its components locally if it wants to setup a manufacturing unit in the country. Which in short means go Big on investing or go bye bye.
This has led many multi-national companies such as H&M, Zara and many to divert to other South-East Asian countries such as Veitnam,Taiwan and ofcourse China for manufacturing as many such brands including Apple, source its components from various suppliers and different countries as mentioned earlier.
Apple’s new manufacturing plant in India and what does it mean for future iphones?
India is a huge and a very important market when it comes to consumer electronics. It alone can make or break a company.
Apple for a long time had never taken India as its main target market, (mainly due to the reasons listed above )
This has given many advantages to other chinese counterparts to excel and make a huge market in India. But now it seems Apple has started to rethink.
Apple already manufactures a few iPhone models such as the iphone XR and the iphone SE. But now Apple is planning to scale up the manufacturing process in India. Apple has invested a whopping $1 billion through its largest contract manufactures Wistron and Foxconn, to produce around $40 billion worth of smartphones.
As per latest reports, iphone 11 production has already started in India at the Foxconn factory near Chennai, and we can soon hear an official announcement and a substantial price cut for the same.
Going by other reports, the upcoming iPhone 12 too would be manufactured in the same Foxconn plant, but all this would take some time and we can expect to see Made in India iPhone 12 around the end of next year.
Let’s sum up.
India is too big a market to ignore and Apple has realised this fact sooner than later. The huge $1 Billion investment clearly states that the future of iPhones in India seems much more promising than before.
One of the biggest steps from Apple India just came in on the 23rd September by launching it’s first Online store in India. It’ll mean that now we can directly buy and configure iphones, ipads, macs and all the accessories directly from Apple’s website and will not have to depend on other resellers such as Currents or imagine.
Just the last step of the ladder remains the pricing, and if Apple plays the price game right in India, chances are many of our cousins might receive lesser affection the next time they are visiting India, from the U.S or Canada.
That’s all in today’s edition of Updated, till next time Stay Safe- Stay Engaged- Stay Updated.