Why Apple product are so expensive in India
It’s Diwali here, one of the most important festival in India. And guess what I am studying Custom Duty because I have my Indirect Tax exam after couple of days.
I have been found of Apple product (very much, just ask my friends to confirm) coz I like there technology and innovation, but there ‘too pricey’ tags worries me a lot (and many other Indians) merely due to reason that Apple products are undoubtedly most expensive in India. Means you can buy an iPhone for (not just, but lucrative) $650 in America and at similar prices in other nations but in India you pay 45,500 for an iPhone 5. After looking at this price tag you will prima facea feel as if why would someone buy a phone (so expensive) which is available for Rs. 33,800 ($650×52=Rs33,800) in America and 45,500 in India.
After imparting my knowledge on Excise, VAT and Custom Duties, now I can explain you how. Needless to mention its still now enough to clear my examination and I am blogging instead of studying, god know my result very well.
When an item reaches the custom boundaries before it is cleared for sale in India, the government has made sure that the items are not cheap as compared to home-grown products. So a simple and profitable way is ‘Taxation’. A product before it is ready for sale needs some modification in pricing. The importer has to first pay a 10% custom duty (the rates are variable I am just taking the ideal one).
Hmmm… Well that make it of only $65 expensive, making the iPhone for Rs. 37,180 [($650+$65)*52]. What about the rest?
Wait for it.. an additional Excise Duty (called CVD) of 12% means Rs. 4,417… What about the rest?
Wait for it.. an additional Educational Cess and SAH which is 3% of the total tax, means (3,380+4,417)*3%=Rs. 234… What about the rest?
Wait for it.. (Hey! the Government is probably inspired from Barney) an additional Sales Tax (called Special CVD) of 4% if the total amount, i.e. (37,180+4,417+234)*4%=Rs. 1,673.
The total now comes out to Rs. 43,504. Which is around 28.85%.
The balance amount is for Apple’s franchise in India iWorld.
I got inspired to write this post coz I read many blogs in which users were pretty much disappointed because of Apple selling there products in India with the most inflated price tag on the planet.
Maybe next time, you won’t blame Apple so much. Because a major amount of price that you pay goes to the Government. I would call this ‘Protectionism’. I yes, the don’t even blame the Government, they are correct here, coz that are protecting the Indian Industry. I just hope that they do something good for us from the money they receive (which is very unlikely).
This post was written with my iPhone, so typos are common. So please inform me about the mis-spells here and yes also write a feedback below 🙂
Not only India but most of the countries have custom duty and counter veiling duties. Take United Kingdom, it will charge 3.7% Custom duty and 20% VAT on Iphone, adding 24% to the cost.
After levying these import duties also, if we get these phones cheaper in UK than it would be a a real surprise!!
Hi Mukul!
Thanks for enhancing our knowledge.
When it comes to Apple product. They are listed exclusive of local taxes on UK’s site, but in India the price is not mentioned anywhere and their reseller show price which is inclusive of taxes.
So there is a price difference on the face of it.
Legend….. Wait for it…. Dary. Legendary post!
Due to money falling against dollar, I doubt iphone 5c will be affordable in India!
It is actually going to be very expensive, but this will happen to all other phones also.
The initial price of the first iPhone (iPhone 3G) was Rs. 31,000. And this price has been constantly increasing for all the new models, whereas in US initial price for new iPhone models is constant at $649. Still Apple has managed to penetrate the Indian market. Lets see what happens this time.