Apple Gains as India Cuts Smartphone Import Tax to 15%

India's reduction of import tax on smartphones from 20% to 15% will directly benefit Apple, which imports high-end iPhones despite increasing local production.

High-End iPhone Models to Benefit from Tax Cuts Despite Local Production

Apple, which continues to import its high-end iPhones into the nation despite boosting local production, will directly profit from India's decision to slash import tariffs on mobile phones and some crucial parts to 15% from 20%.

On Tuesday, India's finance minister, Nirmala Sitharaman, presented the annual budget for 2024/25 to parliament. She stated that the import tax on mobile phones, printed circuit board assembly (PCBA), and mobile chargers is necessary to protect the "interest of consumers."

According to Neil Shah, a co-founder at Counterpoint Research in Hong Kong, a 5% cut in tax on the smartphones would bring in $35-50 million per year for Apple. India imports about 10-12% of Apple's iPhones annually.

According to Reuters, Apple still ships some of its more expensive Pro and Pro Max iPhones to India, even though the company has increased local manufacturing in the nation with the help of contract manufacturers like Foxconn and the Tata Group of India.

Apple's Imported Components to Gain from Tax Reductions

The iPhone maker "will directly benefit ... they (also) have some models for which PCBAs are still being imported," he added.

This change will also make it easier for new companies to join the market by reducing import charges. "It's a game changer for them," he explained.

Someone with knowledge of the situation also mentioned that other manufacturers, including Samsung, will reap some benefits, though not as much because most of their cell phones are manufactured domestically.

A request for comment was not promptly responded to by Apple and Samsung.

If you believe Counterpoint (via Investing.com), Apple controls 6% of the smartphone market in India.

Reuters states that in January, India's deputy IT minister discreetly pushed for a decrease in mobile phone import levies, claiming that the nation must "act fast" to entice global corporations with lower tariffs or risk falling behind China and Vietnam in the competition to become a major smartphone export hub.

India's Strategy Boosts Smartphone Manufacturing and Attracts Major Tech Firms

Many tech companies have set up shop in India, including Apple, Xiaomi, Samsung, and Vivo, thanks to Prime Minister Narendra Modi's recent push for the country to become a smartphone manufacturing hub and the country's $24 billion domestic production strategy, which includes mobile phones.

A Chinese company called Xiaomi has previously requested tariff reductions on parts used in phone cases, such as USB cords and batteries.