New Delhi: Apple fans in India are having to shell out a lot more than their counterparts in the US to get their hands on the latest iPhone 15 models, which were launched last month.
In India, the iPhone 15, which costs $799 in the US, is selling for Rs 79,900 (around $965), while the $999 iPhone 15 Pro is selling at Rs 1,34,900 ($1,628) and the $1,199 iPhone 15 Pro Max costs Rs 1,59,900 ($1,930) — which shows that the price difference in some models is more than 50 percent.
According to experts, a variety of factors, including Apple’s pricing strategy, forex fluctuations and import duties, are leading to this huge price discrepancy.
Prabhu Ram, head of the Industry Intelligence Group (IIG) at CyberMedia Research (CMR), told ThePrint that Apple has firmly established itself as a premium brand — a positioning that plays a pivotal role in maintaining its enduring aspirational appeal among consumers.
“Preserving this perception of exclusivity and quality forms a fundamental component of Apple’s pricing strategy for new iPhones,” he said.
Apple started assembly of iPhones in India in 2017 with iPhone SE, and subsequently, some of its other devices, including iPhone 12, iPhone 13 and iPhone 14 were assembled in India.
In the latest line-up, the iPhone 15 and iPhone 15 Plus models are being locally assembled. But even if smartphones are assembled in India, many components are imported. These components also attract duties, which impact the phone’s price.
Ram explained that, while iPhones are ‘made’ in India, it is important to note that their components are subject to import duties. Similarly, the iPhone 15 Pro models (which are imported) face even steeper tariffs, with a 20 percent customs duty and an additional 2 percent cess.
A 2022 comparative study of India’s import tariffs in the electronics sector, by the Indian Cellular and Electronics Association (ICEA), released in July this year, noted that India’s electronics manufacturing industry, which included mobile phones, was marred by high input tariffs, resulting in increased cost of production, reduced scale of operations, and lower ability to compete in both the global and the domestic markets.
High tariffs on inputs also tend to reduce the impact of schemes, like production-linked incentives, it had said.
According to industry experts, in India, Apple’s growth is primarily driven by older-generation models, whose prices see a drop once new models are launched.
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How Apple tries to increase demand
Prachir Singh, senior research analyst at Counterpoint Research, pointed out that if historical data was considered, Apple has not changed their pricing strategy.
“However, in the last three to four years, they have focussed on how to increase the demand for iPhones in India by making them more affordable for consumers. For this, their main strategy is driving the sales of ‘N minus 1 or N minus 2’ models,” he said.
“For example, after the launch of iPhone 15, this year N minus 1 model will be iPhone 14, and N minus 2 will be iPhone 13,” he added.
Singh explained that with the festive season, there would be big discounts on the previous generation iPhones on e-commerce platforms like Amazon and Flipkart — pushing demand for the iPhone 14 and iPhone 13 lineup.
Ram added that, according to CyberMedia Research insights, Apple’s market growth in India was predominantly driven by older-generation iPhones.
Apple capitalises on this trend, especially during festive season sales, he said, adding that for example, when the iPhone 14 series was introduced, 54 percent of the shipments that year were made by older-generation iPhones. In contrast, when the iPhone 13 series debuted, a significant 77 percent of the shipments in the year were from the previous generation iPhones, he said.
Singh also added that over the past year, the dollar has gotten stronger against the Indian rupee, which also has a bearing on the price of smartphones.
“For a completely built unit import, the increase in cost is directly related to forex (USD to INR),” he said.
“For a locally assembled model, it would depend on multiple things… like how much is being sourced in India and different imported components carry different import duties.
“If USD gets stronger against INR, we will see effects on smartphone pricing across brands,” he explained, adding that, “Forex impact on smartphone prices would be in the range of 5-8 percent compared with last year.”
According to a note by analysts at investment management and research services provider AllianceBernstein, quoted by TechCrunch, an online portal, earlier this month, “per usual, Apple did move international prices of iPhones, largely to reflect currency movements”.
“However, in contrast to last year, where a strong dollar drove Apple to raise prices in most foreign currencies to keep prices constant in dollar terms, smaller moves in the dollar meant that price adjustments were more mixed. With Apple raising prices in Japan and for the Pro models in India and lowering them in Europe – all were in line with currency moves,” AllianceBernstein added.
It also pointed out one notable exception — despite a weaker yuan, pointing to Apple potentially raising prices in China, it instead held prices constant, potentially reflecting concerns about weaker consumer demand and rising political backlash.
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Maintaining aspirational value
According to Faisal Kawoosa, chief analyst and founder of Techarc, the thought process that making things in India will make them cheaper is not the right approach.
He told ThePrint that ‘Make in India’ was never started with the aim to make things cheaper in India.
“Make in India is more about macroeconomic issues…Reduce our import dependence, generate employment in manufacturing and how we can have India-centric and Indian IP products,” Kawoosa said.
While he agreed that India may have certain disadvantages vis-a-vis other countries that are already in manufacturing space for many years, he pointed out that the many interventions announced by the government in the form of subsidies and rebates, including the production linked incentive, were helping offset those disadvantages.
“Now, will all these efforts ever mean that India might be at par, if not cheaper than other countries as far as production costs etc. are concerned? We have to understand that economies are not achieved in a couple of years of manufacturing,” he said.
Manufacturing has a learning curve, even if there is a playbook and you implement global best practices, every place has its own advantages and disadvantages, he explained.
“So it takes time to bring in efficiencies and generate benefits that can then be passed on to the end consumer,”
Pointing out that Apple’s manufacturing journey in India is fairly recent, Kawoosa said that the company also has a positioning in mind, and “that positioning and brand value is very much dependent on the pricing of devices”.
“If it becomes a Rs 30,000 phone, that aspirational value will go away for Apple… Pricing is very important for a brand like Apple as it cannot dilute its positioning from a premium brand. It needs to keep that aspirational value,” he stressed.
Singh added that Apple now offers financing options so despite whatever the MRP, people can get an iPhone for as low as Rs 3,000 a month.
“So, this is the real play, making iPhones accessible without losing the premium status and aspirational value… I do not see Apple changing its pricing strategy in the future as well. The rise of Apple in India was because of discounts on previous models and financing options available,” Singh added.
(Edited by Richa Mishra)
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