Apple ups iPhone prices in India as tax increase makes imports costlier

MUMBAI (Reuters) - Apple Inc AAPL.O has increased the prices of most of its iPhone models sold in India after the government last week raised taxes on imported phones in a bid to boost domestic manufacturing.

FILE PHOTO: A man talks on his iPhone at a mobile phone store in New Delhi, India, July 27, 2016. REUTERS/Adnan Abidi/File photo

Barring its locally-assembled iPhone SE model, Apple raised prices of iPhone handsets by an average 3.5 percent, according to a price sheet reviewed by Reuters.

Its priciest iPhone X model now costs 105,720 rupees ($1,646.61) for a 256 gigabyte (GB) variant, according to Apple’s India website, an increase of 3.6 percent. The price of a 256 GB iPhone 8 has risen by 3.1 percent to 79,420 rupees.

As Prime Minister Narendra Modi’s government strives to boost manufacturing of phones in India - the world’s second-biggest market by mobile subscriptions and among the top three countries by annual smartphone sales - it last week raised the customs duty on phones to 15 percent from 10 percent.

That was set to make imported phones, including Apple iPhones, costlier. Some other top phone brands, such as Samsung Electronics Co Ltd 005930.KS and Xiaomi, assemble the majority of their phones sold in the Indian market locally.

Apple's Taiwanese contract manufacturer, Wistron 3231.TW, assembles the iPhone SE in the technology hub of Bengaluru in southern India.

Apple also has plans to expand local manufacturing in India but wants a range of incentives and tax breaks from the federal government which New Delhi has yet to agree to.

An analyst said a small increase in the price of iPhones was unlikely to dent Apple’s less than 3 percent market share in India, where it’s seen as an aspirational brand but its steep pricing puts it beyond the reach of many.

“Apple’s halo as a premium brand in India cannot be taken away by this meager price rise,” said Navkendar Singh of technology researcher IDC.

Basic or feature phones still comprise a large chunk of India's roughly 750 million mobile phones, although sales of smartphones are growing faster. Alphabet Inc's GOOGL.O Google earlier this month unveiled a new version of its Android mobile phone software with an aim to power low-cost entry-level smartphones.

Reporting by Sankalp Phartiyal; Editing by Louise Heavens