Apple hikes prices of iPhones post-Budget FY19; will others follow the suit?
The custom duty increase would be third increase in last 12 months, followed by Indian government.
Just four days after Union Budget FY19, Apple Inc has increased its iPhone product prices due to custom duty hike, indicating that other overseas smartphone makers may follow the suit.
Finance Minister Arun Jaitley, on February 1, hiked import duty on various overseas product which included mobile phones by 20% from previous 15%.
Apple would be the first company to raise prices of its iPhone smartphones and watch by 3.6% with immediate effect.
According to Apple, the iPhone 6 (32GB) is now priced at Rs 31,900 from previous market price of Rs 30,780. While iPhone 6s (32GB) has a new price of Rs 42,900, higher from previous Rs 41,550, and iPhone 6s (128GB) has a MRP of Rs 52,100 from the Rs 50,660.
Not only this, the iPhone 6s Plus' two variants, 32GB and 128GB, also have seen increase, and are now available at Rs 52,240 and Rs 61,450 - higher from their previous market price of Rs 50,740 and Rs 59,860 respectively.
iPhone 7’s two variant 32GB and 128GB will also come with new MRP of Rs 52,370 and Rs 61,560 - up from Rs 50,810 and Rs 59,910 respectively.
And the bigger version iPhone 7 Plus’ 32GB is available at Rs 62,840 - up from Rs 61,060; whereas the 128GB of this phone is at Rs 72,060 versus Rs 70,180.
The latest iPhone models have also undergone price hike.
iPhone 8 64GB is at Rs 67,940 now - up from Rs 66,120; while iPhone 8 256GB is at Rs 81,500 - up from Rs 79,420. The bigger version iPhone 8 Plus has new MRP of Rs 77,560 and Rs 91,100 for 64GB and 256GB variant - compared to their previous price of Rs 75,450 and Rs 88,750.
Finally, iPhone X - the most searched smartphone as per Google latest trend, is now available at higher price of Rs 95,390 in 64GB variant and Rs 1,08,930 in 256 GB variant.
Earlier, these two variant were available at Rs 92,430 (64GB variant) and Rs 1,05,720 (256GB variant).
iPhone watches have also seen hike - with the Apple Watch Series 3 GPS (38mm) now at new MRP of Rs 32,380 versus previous Rs 29,900; the Apple Watch Series 3 GPS (42mm) at Rs 34,410, versus previous Rs 31,900.
The Finance Minister increased custom duty on import of smartwatches from 10% to a massive 20%.
It may be noted that this would be Apple’s second hike in last two months. On December 18, 2017, the company had increased prices on its smartphones ranging from 3% to 5%. The reason was the custom duty hike.
The government earlier increased the custom duty on phones brought from outside India to 15% from its previous 10%. That time also, Apple was first company to increase price of its products after this change.
The duty increase would be third increase in last 12 months.
This time many are expecting that other overseas smartphone makers like Samsung Electronics, Xiaomi, Huawei and many more may follow the suit.
One key reason behind this hike is stated to enhance domestic manufacturing.
HDFC Securities stated that this will support the ‘Make in India’ campaign and give impetus to domestic manufacturing.
In Elara Capital’s view, decision in Budget FY19 is slightly positive for telecom companies like Reliance Jio, which is setting up local manufacturing plants for its devices. However negative for other incumbent operators like Bharti Airtel and Idea Cellular.
Similar views were also from analysts at Stewart Mackertich. They said, "To Incentivise Domestic Value addition and Make in India, it is proposed to increase customs duty on mobile phones from 15 % to 20 %, on some of their parts and accessories to 15 % and on certain parts of televisions to 15 %."
Analysts at Motilal Oswal said the custom duty hike is to increase local production of phones in India. They explained that almost 60% of the 300 million handsets sold in India last year were assembled locally, with smartphones having a higher share.
Quant Broking on custom duty hike said, "This is a mild NEGATIVE for the distributors of imported mobile phones, who may see volumes impacted to an extent next fiscal."
Nirmal Bang, however, said, "Increase in import duties (along with a welfare cess of 10%) on items such as mobile phones and other consumer durables will also add to upward pressure on inflation."