NEW DELHI — India has hiked the import tax on smartphones and some other electronic items, a move expected to boost domestic manufacturing and hit companies like Apple that sell high-end handsets.
The customs duty on mobile phones is now 15%, up from 10%. In June, Apple began assembling the iPhone SE in Bangalore at a factory of Taiwanese contract manufacturer Wistron, but the California-based company exports all other iPhone models to India.
Apple India declined to comment on the hike.
The company has sought several concessions, including duty relief, for its expansion in the country, but the Indian government, which wants to curb imports and boost local production under its ambitious Make in India campaign, is unlikely to accept the requests.
“Apple’s phones will become costlier, but companies like Samsung Electronics importing high-end models for sale in India will be impacted, too,” said Manoj Gairola, founder and editor of Telecom Tiger, a news portal covering the industry. “Most of the foreign handset makers are assembling only low-end phones in India. So, the high-end segment would be hit.
“There are chances that the [import] duty on handsets may further rise by another 5%. Domestic manufacturers have been demanding this for foreign companies selling in India.”
Other than increasing tax on imported mobile phones, a Finance Ministry notification issued late Thursday said the customs duty on items such as microwave ovens, television sets and light emitting diode (LED) lamps has been doubled to 20%. In addition, digital cameras and some other products will now be slapped with a 15% rate, up from 10%.
In a statement, Kamal Nandi, business head and executive vice president of Godrej Appliances, said, “We welcome the increase in customs duty from 10% to 20% on import of microwave ovens. This will benefit and promote domestic manufacturing of microwave ovens.”
The Economic Times reported that iPhone prices could go up by 2,000 rupees to 3,000 rupees ($31 to $47). Citing an example, it said, the starting price of the iPhone X, currently at 89,000 rupees, could go up to 92,000 rupees if Apple passes on its added tax burden to consumers.
According to Counterpoint Research, India’s premium smartphone segment (made up of handsets priced above 30,000 rupees) grew a record 180% year-on-year during the quarter through September, owing to strong performances by Apple; OnePlus, a Shenzhen based Chinese smartphone maker; and Samsung, which controlled 98% of the total shipments in the category.
The premium segment comprises 3% of India’s total smartphone shipments but 13% of total shipment revenue, it said.
According to International Data Corp., Samsung and Xiaomi led the overall smartphone market in the quarter, each with 23.5% shares, followed by the Lenovo Group, including Motorola, at 9%; Vivo, at 8.5%; and Oppo, at 7.9%. All remaining players were left with 27.6% of the market.
IDC said India’s smartphone shipments reached a record high 39 million units in the three months through September, 40% more than the previous quarter and 21% over the same period last year.