Why iPhones are so expensive in India compared to other countries

The iPhone SE 2022, which was unveiled at Apple's March 8 'Peek Performance' event, has displaced its 2020 predecessor as iPhone's most "affordable iPhone", one with 5G support. The iPhone SE 2022 (or SE 3), which will be available for purchase from tomorrow, starts at Rs 43,900 in India.

The US price of the device is around Rs 32,000, more than Rs 10,000 cheaper than in India. Experts suggest that the higher price in India is a combination of high import duty, 18 percent GST, other fees, and Apple's own profit margin.

The price gap between India and other countries is pretty high. For instance, in 2020, Indians were paying Rs 69,900 for the starting variant of the iPhone 12 Mini, compared to Americans, who bought the same device for Rs 51,287 ($699) --  a gap of Rs 18,620 (37 percent).

A source familiar with the matter says assembling iPhones in India is unlikely to bring down the prices for local consumers as Apple's OEMs (original equipment manufacturers) still pay high rates of import duties on components.

The PCBA (printed circuit board assembly) used in iPhones attracts an import duty of 20 percent. Similarly, iPhone chargers also cone with an import duty of 20 percent. Besides import duty, a goods and services tax (GST) of 18 percent -- standard for all smartphones -- is also levied on Apple products in India.

At the moment, Apple products that are manufactured (or assembled) in India include the iPhone 11 and iPhone 12 series at Chennai's Foxconn plant, and iPhone SE and iPhone 7 at Bengaluru's Wistron facility. The iPhone 13 series will be assembled in Chennai from next month.

Additionally, Apple is still dependent on third-party retail networks to sell its smartphones and other products in India. These vendors, distributors, transport agents and other middlemen take a hefty cut, shooting up the price for end consumers. However, a source said Apple ensures that its channel and sales partners float many offers to make products more affordable to consumers.

Not to forget, currency depreciation is another major factor as to why the iPhone is expensive in India and relatively cheaper in other countries like Japan and Dubai. Against the backdrop of the Ukraine-Russia war and the expected hike in US interest rates, the Indian rupee has fallen 3.5 percent against the dollar in 2022.

However, the ground is slowly shifting as India becomes a crucial market for Apple. In the fourth quarter of 2021, Apple recorded a steep rise of 34 percent in iPhone sales. It is expected that the company's revenue may jump from Rs 22,845 crore in FY21 to Rs 30,000 crore in FY22. In light of this, Apple is increasing its production in India, with the iPhone 13 series slated to be manufactured here next month.

As of December 2021, Apple was manufacturing about 70 percent of the smartphones it was selling in India. Further, Apple also launched its official online store for India in 2020, reducing its dependence on third-party retail networks.