During his visit to India, Apple CEO Tim Cook said that iPhones are sold at pricey price tag in India. Even after converting US dollars into Indian currency, Apple’s products bear more expensive price tags. As a matter of fact, prices of Apple products run higher than the amount converted into Indian currency. Hence, currency conversion will not offer you any solace.
This clearly indicates that Apple’s products are sold in India are expensive, not just by Indian standards, but by American standards too. This debate sparked last year, when Apple launched its iPhone 6s and iPhone 6s Plus in India.
Tim Cook during the launch event of iPhone 7 and iPhone 7 Plus announced the prices of both flagship phones. iPhone 7 was priced at $649, which, if you convert into Indian currency, comes to Rs 43,200; while iPhone 7 Plus was announced at $769 which is Rs 51,200. However, if you look at the table below, it says much more than figures.
|Phone||GB||Launch Price India||Launch Price U.S.||Premium|
|iPhone 7||32||Rs. 60,000 ($897.33)||$649||38%|
|iPhone 7||128||Rs. 70,000 ($1046.89)||$749||39%|
|iPhone 7||256||Rs. 80,000 ($1196.44)||$849||40%|
|iPhone 7 Plus||32||Rs. 72,000 ($1076.80)||$769||40%|
|iPhone 7 Plus||128||Rs. 82,000 ($1226.35)||$869||41%|
|iPhone 7 Plus||256||Rs. 92,000 ($1375.91)||$969||42%|
Indian consumers will have to 40% more prices compared to the prices of iPhones in USA. In another price comparison, it is found that iPhones will be sold at cheaper prices than at the prices fixed for India.
|iPhone 7 32GB||iPhone 7 Plus 32GB|
|UK||599 British pound (Rs 53,100)||719 British pound (Rs 63,750)|
|Australia||AUD 1079 (Rs 55,000)||AUD 1269 (Rs 64,600)|
|UAE||Dh 2599 (Rs 47,100)||Dh 3099 (Rs 56,100)|
|Canada||899 Canadian dollar (Rs 46,250)||1049 Canadian dollar (Rs 53,971)|
|China||6,388 Yuan (Rs 63,650)||7,188 Yuan (Rs 71,630)|
The table shows that Apple consumers in China will have to shell out more money; we can safely say that China and India are sailing in the same boat. To maintain profit margin, Apple will not cut the prices; moreover, China will have to pay $45 more than what they paid for iPhone 6s and iPhone 6s Plus last year.
Why iPhones Are Expensive In India Than Other Countries
In India, Apple cites some valid reasons for exorbitant prices Indians have to pay for iPhones.
Third Party Retailers
Apple was planning to start its own manufacturing units in India. But this will certainly take some time. Till then, the brand has to rely on third-party retailers as Indian laws do not permit FDI in single-brand retail. Apple doesn’t have any option but to shake hands with Indian retailers; to maintain profit margins, Apple has to sell its products at expensive rates.
Before we discuss different taxes levied upon Apple’s products, experts blame poor Indian currency in comparison with US dollar. Like India, China also faces similar predicament as Chinese Yuan performs poorly against US dollar. Apple would never take risk of slashing prices with declining value of Indian currency. This will directly affect its profit margins.
India’s tax structure is a major stumbling block for any foreign brand to enter this large market. However, Apple is ready to sell its products with expensive prices. GST is not implemented in India yet, and this makes it difficult for Apple to maintain a low price. India imposes custom duty on total price of the product, shipping charges and handling charges. In 2015, Apple had to pay 11.43% in custom duty for iPhone 6s.
According to Zauba, accessories boxed with iPhone are taxed separately; last year, taxes in India were more than double of the custom duty paid for phones at 28.85%.
Though Apple’s products can easily beat products manufactured by competitors like Samsung, the brand is helpless as it doesn’t have physical presence in India. Samsung, Micromax, and Lenovo have their manufacturing facilities in India. In addition to this, Huawei Technologies Co. is also planning to open its facility in India.
Manufacturing or assembling products in India can certainly help brands reduce the prices. Since Apple has no such benefit, it has to pay an import duty of 12.5% on every iPhone it sells in India. Against this, brands like Samsung and Micromax are not paying any such duties as they fought against government of India when the latter tried to impost 29% total import duty on accessories like chargers and adaptors.
Apart from central taxes, Apple has to pay 12.5% Value Added Tax (VAT) to various states on total price of the phone.
India: Cape of Good Hope for Apple
Apple’s declining year-on-year sales percentage is a moot question for the brand. Sales in China (the second biggest market for Apple after USA) also plummeted. India, however, has shown some good signs as Apple registered 56% year-on-year growth here in India. This is the reason why Apple sees India as a land of hope. The Digital India vision of India’s Prime Minister Narendra Modi can help Apple to improve its sales figures in South-Asian market provided Apple changes its pricing policies.
Given the prevailing situations, India is posed as good opportunity for Apple to sell its products. Successful implementation of GST would also augur well for Apple.