Why iPhones are still pricier in India despite 'Made in India' production (2024)

Apple iPhone lovers are eagerly waiting to grab the latest iPhone 15 series phones. Preorders for these new-generation iPhones are scheduled to commence on September 15, with the official sale date slated for September 22. What's intriguing about this launch is that the pricing strategy for the new iPhone models, iPhone 15 and iPhone 15 Plus, in India, remains unchanged from their predecessors, iPhone 14 and iPhone 14 Plus.

However, a noteworthy price adjustment comes in the form of the Pro models. The iPhone 15 Pro and iPhone 15 Pro Max now come with a slightly higher price tag. The iPhone 15 Pro is priced at Rs 1,34,900, while the iPhone 15 Pro Max is available at Rs 1,59,900. This represents an increase of Rs 5,000 and Rs 20,000, respectively. Interestingly, Apple has also upped the base storage capacity for the iPhone 15 Pro Max from 128GB to 256GB. Importantly, this price hike isn't exclusive to India but extends globally.

Apple's presence in India has been on the rise since 2016 when the company began local production of some iPhone models. According to reports from the India Cellular and Electronics Association (ICEA) and government officials, smartphone exports from India exceeded $11 billion in the fiscal year ending in March, surpassing the $9-10 billion target. Notably, Apple accounted for nearly half of these exports.

Recent reports suggest that Apple is gearing up to locally manufacture the iPhone 15 Plus in the upcoming quarter, following the successful commencement of iPhone 15 production in India. This shift underscores the steady growth of iPhone manufacturing in India over the past four years, with expectations of reaching approximately 6% in 2023.

Why are iPhones still pricey in comparison to US, Dudai, Singapore?
Despite the increasing local production, iPhone prices in India remain significantly higher compared to other countries like the US, Dubai, and Singapore. The reasons behind this price disparity are multifaceted.

Firstly, iPhones are not entirely "made in India" but rather assembled in the country. The supply chain for iPhone production still relies on components imported from other regions. Consequently, Apple is subject to customs duties, which have a direct impact on the final prices. Additionally, the Goods and Services Tax (GST) of 18% further contributes to the cost, resulting in a cumulative increase of 40% in the final price.

Moreover, pricing involves a complex interplay of factors beyond material costs. Apple has partnered with local companies to provide discounts and trade-in options, mitigating the impact of heavy customs duties and taxes on imported models.

It's essential to note that older-generation iPhone models significantly drive Apple's sales in India. Analysts suggest that the profit margins earned from the sale of "Pro" models help make base models and older-generation iPhones more affordable. This strategy has led to substantial price reductions, making iPhones more competitively priced in India compared to countries like Dubai and Singapore.

While the number of iPhones assembled in India has risen significantly over the years, not all models are produced domestically. This reality prevents Apple from implementing dual pricing tiers, one for locally assembled iPhones and another for those imported.

Lastly, it's worth mentioning that the price stability of flagship smartphones is not unique to Apple. Other smartphone brands, such as Samsung, Oppo, Xiaomi, and Vivo, also manufacture phones in India, including flagship models. Despite this, the prices of flagship devices have largely remained unchanged over the years.

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