In a move that can put more pressures n companies like Apple, the Indian government has announced an increase in the taxes payable on the import of a number of electronic components, which include mobile phones and television sets. The purpose of this move according to the government sources is to curb the tendency to import and to encourage manufacturing in India as part of the Make in India initiative.
The rate of tax has been increased from 10% earlier to 15% now. This does throw a challenge to brands like Apple since their products are already priced much higher which make them affordable by very few in India. Interestingly, the people who are capable of buying these phone at prices above Rs 75,000 can easily buy them from say Singapore or Hong Kong and avoid paying the duty or import tax here. So, in that narrow sense, it is lose-lose situation for Apple and other high-end smartphone brands.
The counter narrative to this is that recent research has showed that the domestic capacity and capability in building mobile phones has also made giant strides. According to an Indian Express report, Pankaj Mohindroo, president of the Indian Cellular Association, said that the tax hike will boost domestic manufacturers who are making about 500 million cellphones a year.
According to one such study, around 80% of the handsets sold in India are at least assembled here. Samsung Electronics, the leader of the pack, does make most of its devices here.
The increase on television sets is even steeper, 10% to 20% and on video cameras it is 10% to 15%.
It will be interesting to see how companies like Apple alter their strategies in the Indian market following this move by the government, since they appear to be the worst affected.