Weak Rupee Widens iPhone’s Price Gap With USA, Domestic Buyers Yet To Reap Made In India Benefits

Speculations of new iPhone 15 models being offered at cheaper prices were put to rest when Apple unveiled the prices of its new flagship on September 12. Yet, the actual disappointment came from the continued increase in price gap with the USA. Where the base iPhone 15 variant almost carried the similar margin to iPhone 14 and iPhone 13, the gap further widened for the premium Pro versions reflecting the Indian currency’s depreciation against the dollar.

Apple has priced the iPhone 15 Pro Max at Rs 1,59,900 in India, with iPhone 15 Pro at Rs 1,34,900. The Pro Max version which offers storage of 1 terabyte has almost touched the Rs 2,00,000 mark. The starting prices of the Pro Max version and Pro version have risen 14 per cent and 13 per cent, respectively, from that of their 2021 predecessors.

“Since Pro models are not being manufactured in India, there is GST and Forex (Foreign Exchange) considerations as well. So, it is unlikely that they will reduce the prices in future,” said Shilpi Jain, Senior Analyst, Counterpoint Research.

Unlike the base variant, the Pro models still enter the Indian boundaries as finished products. Hence, an import duty of 22 per cent, and GST of 18 per cent are applicable on them.

However, the concern to the price gap as of now is the Rupee, which has grown weaker against the dollar in recent years.

Why Has Rupee Grown Weaker Against The Dollar?

In 2022-23, the Rupee depreciated almost 8 per cent against the dollar, highest since 2019-20. At the end of the previous fiscal, the Indian currency stood at 82.18 to a dollar. Recording a fall of more than 10 per cent in the previous calendar year, it performed worse than many Asian currencies.

Abhishek Upadhyay, Senior Economist at ICICI Securities Primary Dealership said the fall came in a year full of supply shocks for India. “Rise in commodity prices and Dollar gaining is never a good combination for the home currency. The supply shocks from the geopolitical conflicts last year brought down the Rupee against the Dollar,” he added.

World food commodity prices rose nearly 40 per cent in two years just before Russia’s invasion of Ukraine in 2022, and the war pushed the prices even higher, according to International Monetary Fund.

The war disrupted the global supply chains, causing volatility in the currency market, with a rally in the global oil prices further weighing on the Rupee. As a result, the Reserve Bank of India had to intervene in the later part of the year by dipping a hand into its forex reserves.

At present, the domestic currency is holding better against the dollar compared to last year. It settled at 83.15 to a dollar on Friday, hanging around its October 2022 low of 83.28.

“Rupee has largely been range bound this year. It is surely in a better position to absorb the global shocks with lesser domestic inflation,” said Upadhyay.

Who Will Benefit From The Price Gap?

Apple has kept the prices of the latest iPhone 15 variants unchanged in USA, with the Pro Max version starting at $1,199 this time. Both the base and Pro variant are priced at $799 and $999, respectively, similar to the initial pricing of their 2022 and 2021 counterparts.

This is heavily in contrast to India where prices of the Pro variants have been continuously increasing.

Such widening of the price gaps further benefits the secondary market sellers in India, who pool in the cheaper iPhones from countries such as USA and UAE and sell it at a profit to the Indian buyers.

Since the prices offered on the new iPhone 15 Pro variants in India are comparatively higher than in countries like UAE, China and Hong Kong, chances are that more local buyers may turn to the secondary market. Therefore, a decline in the Rupee is set to indirectly profit these sellers.

In India’s case, the only variant with an unchanged price is the base iPhone 15, which is currently assembled in the country and is also a protected segment due to its larger share in sales. However, the price is still discouraging to the domestic buyers who were expecting it to come down as a result of its local manufacturing.

Why Is iPhone 15's Price Unchanged After 'Made In India'?

Counterpoint Research believes that Apple is a highly desired brand in India, and therefore, the company has not reduced the pricing even after locally manufacturing the base variant under the “Made in India” labelled PLI (Production Linked Incentive) initiative by the Indian government.

“For some years, we have been observing that though the pricing remains same, frequency and magnitude of promotions and discounts have increased over years for models which are being assembled in India,” said Jain.

Rather than introducing the new model for a reduced price, Apple has increased the discounts offered on the previous models. Since majority of the Indian buyers buy Apple products more for the brand value, and less for usage, the American tech-giant has barred the latest flagships from any relaxation on prices.

Another reason for Apple to not directly pass on the local manufacturing benefits over the new models is that the localisation has not fully been achieved yet. In fact, the phones at present are just being assembled in India with components still imported from other countries.