India Slashes Import Tax on Smartphones, Providing a Boost for Apple
India reduces import duty on mobile phones and key components from 20% to 15%. Apple to benefit significantly from the tax cut, with an estimated annual gain of US$35-50 million. Move aims to attract global companies and position India as a major smartphone export hub.
This decision is set to directly benefit tech giant Apple, known for importing its premium smartphones into the country despite ramping up local manufacturing efforts.
During the presentation of the annual budget for 2024/25 in parliament, India's finance minister Nirmala Sitharaman highlighted that lowering the import tax on mobile phones, printed circuit board assembly (PCBA), and mobile chargers is aimed at serving the best interests of consumers.
Neil Shah, a co-founder at Counterpoint Research based in Hong Kong, pointed out that approximately 10-12% of Apple iPhones are imported into India annually. With a 5% tax reduction on these devices, Apple stands to gain an estimated annual benefit of US$35-50 million.
Despite Apple's strides in local production through partnerships with manufacturers like Foxconn and India's Tata Group, the company still relies on imports for some of its high-end Pro and Pro Max iPhone models in India. Shah noted that Apple will see direct advantages from the tax cut, especially for models that still require imported PCBAs.
This move is not only advantageous for established players like Apple but also paves the way for new entrants in the market by easing import duties, marking a significant shift in the industry landscape.
While Samsung and other manufacturers will also experience benefits from the tax reduction, the impact will be more pronounced for Apple due to its higher reliance on imports compared to Samsung's predominantly locally manufactured smartphones.
Apple and Samsung have yet to provide official comments on the matter, indicating a potential strategic evaluation of the implications of this policy change on their operations in India.
With a 6% share of India's smartphone market, Apple's position in the country is notable, and this tax revision could further solidify its presence and competitiveness in the market.
The Indian government's decision to lower import taxes on mobile phones aligns with the country's ambition to emerge as a major smartphone export hub, competing with countries like China and Vietnam. This move underscores the urgency to attract global companies by offering more favourable tariff structures.
Prime Minister Narendra Modi's push to position India as a hub for smartphone manufacturing has already attracted key players like Apple, Xiaomi, Samsung, and Vivo, who have expanded their local production capacities under India's US$24-billion production scheme.
Xiaomi from China has also advocated for tariff reductions on sub-components like batteries, USB cables, and phone covers.
India reduces import duty on mobile phones and key components from 20% to 15%
Apple to benefit significantly from the tax cut, with an estimated annual gain of US$35-50 million
Move aims to attract global companies and position India as a major smartphone export hub
Source: REUTERS