Apple Inc. (NASDAQ:AAPL) manufacturing iPhones in India could solve one of its long-running problems that is already threatening to affect its profit margins. Manufacturing iPhones in the world’s fastest growing smartphone market could result in more affordable smartphones, needed to reinvigorate iPhone sales. The same is however dependent on the iPhone maker reaching an agreement on tax breaks, highly needed to reduce manufacturing and production costs.
Push For Cheaper iPhones
Manufacturing and production costs are currently 12% of the price of an iPhone. Apple getting its wish on tax breaks on this front could result in cheaper iPhones in the future, something it is aggressively pushing for. However, it appears it might take some convincing for the tech giant to get its wish on the proposed breaks given the hard stance shown so far by regulators.
Trade Minister, Nirmala Sitharaman, has already pointed out that they are not ready to grant the U.S Company such breaks in that the country is already offering substantial subsidies to manufacturers.
The fact that no other company with manufacturing facilities in the country has received such breaks is also making it hard for regulators to budge on Apple’s demands. The Indian government fears that by according Apple the proposed tax breaks other manufacturers will also demand the same.
Apple already has manufacturers in India including Foxconn and Wistron. It now awaits to be seen if it will move forward with plans to manufacture iPhones in India even as authorities maintain a hard stance over tax breaks.
Apple’s India Prospects
Even with a lack of manufacturing plants and retail stores, the company was still able to capture 66% of the India’s premium phone sales in October. The milestone achievement has helped affirm belief that the Indian market could become an important market for the iPhone maker as competition in China continues to affect sales.
However, Apple still faces an uphill battle on its Indian market push given that the market has attracted a good number of its rivals, most of which are looking for sales opportunities outside China.
Apple stock was up by 1.11% in Friday trading session closing the first week of the New Year at highs of $117.91 a share.