New Delhi: India has announced a reduction in the import duty on mobile phones and key components from 20% to 15%. This move is set to directly benefit Apple (AAPL.O), which continues to import its high-end smartphones despite increasing local production.
Presenting the annual budget for 2024/25 in Parliament on Tuesday, Finance Minister Nirmala Sitharaman stated that the tax cut on mobile phones, printed circuit board assemblies (PCBA), and mobile chargers is in the “interest of consumers.”
Currently, around 10-12% of Apple iPhones are imported into India. A 5% reduction in import tax on these devices is expected to provide Apple with an annual benefit of $35-50 million, according to Neil Shah, co-founder of Hong Kong-based Counterpoint Research. While Apple has increased its local production in India through contract manufacturers like Foxconn and Tata Group, it still imports some high-end Pro and Pro Max iPhone models.
Shah noted, “Apple will directly benefit … they (also) have some models for which PCBAs are still being imported.” He added that the tax cut will also “alleviate import duties for new players entering the market. It’s a gamechanger for them.”
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Other manufacturers, such as Samsung, will also benefit from the tax reduction, though to a lesser extent since a significant portion of their smartphones are produced locally, according to a source familiar with the matter.
Apple and Samsung did not immediately respond to requests for comment. Apple holds a 6% share of India’s smartphone market, as reported by Counterpoint.
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In January, India’s deputy IT ministry advocated for a reduction in import taxes on mobile phones, warning that the country might fall behind China and Vietnam in becoming a major smartphone export hub. The ministry stressed the need to “act fast” to attract global companies with lower tariffs, as reported by Reuters.
Prime Minister Narendra Modi has actively promoted India as a smartphone manufacturing hub. The nation’s $24-billion local production scheme covers mobile phones, encouraging companies like Apple, Xiaomi, Samsung, and Vivo to expand their local operations. Xiaomi has previously sought tariff reductions on sub-components used in batteries, USB cables, and phone covers.
