India has announced a reduction in the import tax on mobile phones and some key components from 20% to 15%, a move that will directly benefit Apple Inc.
Finance Minister Nirmala Sitharaman stated on Tuesday (July 23) while presenting the budget for the fiscal year 2024-2025 to the parliament that lowering the import tax on mobile phones, printed circuit board assemblies (PCBAs), and mobile chargers is in the “interest of consumers”.
According to Reuters, Neil Shah, co-founder of the Hong Kong-based research firm Counterpoint Research, mentioned that India imports nearly 10% to 12% of Apple iPhones annually. If the tax rate on these devices reduces by 5%, it could result in annual revenue of $35 to $50 million for Apple.
Shah added that India’s action will also “reduce import duties for new entrants in the market, changing their competitive landscape”.
Despite Apple increasing its local production in India through contract manufacturers like Foxconn and Tata Group, the country still needs to import certain high-end Pro and Pro Max iPhone models.
Data from Counterpoint Research shows that Apple holds a 6% market share in the Indian smartphone market.
A source familiar with the matter informed Reuters that other smartphone manufacturers like Samsung will also benefit, albeit to a lesser extent, as most of their products are locally manufactured in India.
India’s move to reduce import duties on smartphones aims to enhance its position as a major smartphone manufacturing hub. Earlier reports by Reuters highlighted that in January, a deputy minister of the Indian Ministry of Information Technology privately urged for a reduction in smartphone import taxes, noting that India could lose out to China and Vietnam in the race to become a key smartphone export hub, thus urging for “swift action” to attract global companies with lower tariffs.
Prime Minister Narendra Modi has been actively promoting India as a global smartphone manufacturing hub in recent years. The Indian government’s $24 billion Smartphone Production Plan has been instrumental in encouraging companies like Apple, Xiaomi, Samsung, and Vivo to expand their local operations in India.
Modi first introduced the “Made In India” strategy in 2014 and implemented measures such as the Goods and Services Tax (GST) and Electronic Manufacturing Clusters (EMC) to attract foreign investment in manufacturing in India. Focusing on ten sectors including electronics, automobiles, pharmaceuticals, and heavy machinery, the strategy aims to increase the manufacturing sector’s contribution to the GDP from around 17% to 25%.
Amidst the global disruptions caused by the COVID-19 pandemic in 2020, with supply chains of many industries affected due to disruptions in production and transportation, India seized the opportunity to establish a 5000 square kilometer region to accommodate companies relocating from China to replace China’s position as the “world’s factory”.
In February 2022, India officially banned 54 apps, including those by Chinese tech giants Tencent, Netease, and Alibaba. These apps had been banned in 2020 for sending Indian users’ data to China, citing cybersecurity risks, and were re-released under different names.