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18% GST on iPhones continues to weigh heavily on the final cost to Indian consumers, limiting the impact of price cuts.
Apple Inc is assembling its entire iPhone 16 lineup -- including the Pro and Pro Max models -- in India for the first time, marking the country as the only one outside of China to do so.
While this might seem like a major win for Indian consumers, and there have been modest maximum retail price (MRP) reductions on the high-end models, the phones remain significantly more expensive in the country than in many other parts of the world, including the US, the UAE (Dubai), Malaysia, and Thailand.
The reason? India imposes one of the highest tax rates on smartphones.
There is some positive news for Indian buyers, however. The prices for the iPhone 16 Pro and Pro Max have dropped compared to the iPhone 15 versions.
Consumers can now purchase the iPhone 16 Pro for an MRP of Rs 119,900 -- around 7.6 per cent less (roughly Rs 9,900 lower) than the iPhone 15 Pro's MRP following a reduction, after the Union Budget cut import duties on certain phone components.
When compared to the iPhone 15 Pro's original MRP on its launch last year, the reduction has been even steeper, at approximately Rs 15,000.
Similarly, the iPhone 16 Pro Max has seen a decrease of Rs 9,100 compared to the post-Budget MRP price of the iPhone 15 Pro Max, with a comparable drop of around Rs 15,000 when measured against last year's launch price.
The prices of the phones can go below the MRP; many e-commerce sites usually sell older iPhone models at a price lower than the MRP upon the launch of new iPhones.
Nevertheless, 18 per cent goods and services tax (GST) on iPhones continues to weigh heavily on the final cost to Indian consumers, limiting the impact of such price cuts.
Additionally, the cost of producing iPhones in India is higher than in China, partly due to import duties on components, which add another 7 to 8 per cent to the overall expense. However, these additional costs are reportedly absorbed by Apple.
Another factor driving prices higher is the 10 to 12 per cent dealer margin, as most iPhones in India are sold through third-party dealers. Apple has only two company-owned stores in the country.
By contrast, in the US, 90 per cent of iPhones are sold either through telecom providers offering bundled deals or directly through one of Apple's 247 stores, and via online channels.
One of the key reasons iPhones are cheaper in other countries is the relatively low local taxes.
In the US, state sales taxes, which are equivalent to India's GST, range between 5 per cent and 9 per cent.
Applying an average US tax of 7 per cent to the base price announced by Apple, in the Indian context, would result in an added cost ranging from Rs 4,700 for the entry-level model to Rs 7,000 for the top-end model -- still leaving a significant price gap compared to the current Indian prices.
In Dubai, a popular destination for Indian iPhone buyers, the tax is just 5 per cent. In Thailand, it is 7 per cent; in Malaysia, 6 per cent; and in Vietnam, 10 per cent.
In Canada, tax rates vary by province, ranging from 5 per cent in British Columbia to 15 per cent in Nova Scotia.
Another advantage for buyers in countries like the UAE, Thailand, Malaysia, and Vietnam is that Indian tourists can get local taxes refunded when they leave, subject to certain conditions.
This means that the price announced by Apple in these regions is often the effective price that consumers pay.
Feature Presentation: Ashish Narsale/Rediff.com
