Import Tax Increases On Cellphones In India, Apple May Get Hurt

Indian Government took the decision to increase an import tax on electronic products in an effort to build up local industry. However, it may hurt Apple.

Import Tax Increases On Cellphones In India, Apple May Get Hurt
India Raises Bar On Import Tax On Cellphones, Apple May Suffer

Indian Government increased an import tax on electronic products including mobile phones to reduce supplies from overseas market and promote local industry. The decision may affect Apple as it does not have a manufacturing facility in the country.

The increase in tax from 10 to 15 percent on handsets would make them more expensive. The revenue growth of Apple has been slowed down in the world’s second most populous country over the past years.

Pankaj Mohindroo, president of the Indian Cellular Association, said the rise in import will drive domestic manufacturers who are manufacturing nearly 500 million cellphones per year, which is more than double the output three years ago.

Data from Counterpoint Research indicates that eight out of 10 cellphones sold in India had been manufactured locally. Apple’s arch rival Samsung Electronics manufactures most of its handsets that are sold in the country.

Apple, however, only assembles its iPhone SE handsets in India. The tech giant imports its other models. The company had been seeking a range of incentives and tax reliefs from the Indian government to expand its manufacturing factory in India. However, government officials outlined that they would not make any exemptions for Apple.

Apart from cellphones, the Indian government also increased the import tax on video cameras from 10 percent to 15 percent. Moreover, it doubled the tax on television sets to 20 percent.

Government’s new tax notification rolled out on December 14 would affect companies that are heavily dependent on imports.