Apple cuts iPhone prices by upto 7.5%; passes on GST benefit to consumers

Global smartphone maker Apple has reduced retail prices of its iPhone models from July 1, passing on benefits of lower taxes from the goods and services tax regime to consumers. The move comes as it looks to become more aggressive on capturing a bigger slice of India's smartphone market.

Apple has reduced retail prices of its iPhone models between 4 and 7.5 per cent, which would translate to lowering costs of its high-end iPhone 7 Plus with a 256 gB storage by as much as Rs 6600. The company, which contributes to less than 3 per cent of the total smartphone sales in India, generates higher per cent of the profits.

India transitioned to the goods and services tax regime on Saturday, aimed at having uniform taxation across the country. Electronic goods and smartphones have benefited from the new change. The government plans to impose a 10 per cent counterveiling duty on imported smartphones that is aimed to bring in local manufacturing of these goods.The push towards local electronics manufacturing has forced over 38 global companies to produce goods locally in India. 

Apple has also reduced the price of iPhone SE, the entry level phone made by Wistron  Corp in Bengaluru. These phones have been priced at Rs 6,000 for a 32 GB model to Rs 35,000 for 128 GB version, lower by 4-6 percent than previous prices. Experts say that manufacturers choosing to assemble devices locally in India benefit from around 12 per cent in savings. However, Apple has been known to maintain a price parity among devices it sells globally. 

Indian consumers, for majority of whom a smartphone is their first computing device, have a preference towards larger screens with nearly 85 per cent of smartphones sold in the country having screens larger than 5-inches.

Besides producing iPhones for the local market, Apple has been keen to make India a base to produce these phones for the global market. India has turned down Apple's overtures to make the country a hub to refurbish old phones. It has also been cautious of honouring the wish list of Apple that includes tax incentives for over 15 years to shift its production from China to India.

India has become a major focus for Apple, which is witnessing a drop in sales of its iPhones in developed markets such as the US and China. Since the country’s appetite for expensive flagship devices is still small, Apple continues to produce its four-year-old iPhone 5s to go head to head with players such as Xiaomi, Motorola, Samsung and others in the mid-level market.