Apple has begun manufacturing the iPhone 12 in India, which is a significant and maturing market for the company. However, while domestic manufacturing will allow Apple to offer competitive prices later this year, there will be no immediate cost savings that will be passed on to consumers. The iPhone 12 is now being assembled in India at the Foxconn factory, and the made-in-India smartphone is expected to reach stores in a month or two.
Due to a variety of factors, the manufacturing of the new iPhone 12 is unlikely to have an effect on pricing. Currently, a fully assembled cell phone is subject to a 22.5 percent customs tax. Although there are no duties on Fully Knocked Down (CKD) systems, there are duties on parts that differ by component. As a result, even if the brand manufactures in the world, the duty is still 10-12 percent.
For instance, a company like Xiaomi saves money on duties by sourcing nearly 75 percent of its components locally, including batteries, chargers, and adaptors, but still pays 6-7 percent in CKD. Whereas brands like Apple, which may not currently source many parts locally, also pay a duty of 10-12 percent on low-end devices and about 15% on high-end devices.
At the brand and model level, there aren’t many specifics available. Each component’s import price is subject to duty. As a result, the cost of importing any completely developed phone (CBU) is 22%. Although on CKD, the percentage of manufactured goods is 0%. “However, there are different prices for different components in a CKD package imported,” said Navkendar Singh, Research Director, Client Devices & IPDS, IDC India.
Furthermore, since the iPhone 12’s launch in October of last year, the trade has been selling imported iPhone 12 units and continues to do so. The imported inventory will continue to sell as the made-in-India stocks find their way to the retail market. Getting a different box price in this case will just add to the uncertainty.
Manufacturing the iPhone 12 in India, on the other hand, will certainly help Apple price the model aggressively, particularly in the second half leading up to the holiday season, and help Apple maintain its growth momentum in 2021,” Singh adds.
Apple had a fantastic year in 2020, with iPhone shipments more than doubling from the previous year. This was largely due to the iPhone 11 and iPhone XR, both of which are already manufactured in India. Domestic manufacturing aided to some degree with aggressive pricing during the 2020 holiday season.
