India is raising custom duties on imported mobile phones to 20% from 15%, a bid to promote domestic manufacturing that may hurt Apple Inc.’s ability to compete in the world’s fastest-growing smartphone market.
The iPhone maker has been seeking to expand its presence in India and has negotiated with the government for lower tariffs on certain components. But the latest duties -- part of a budget unveiled on Feb. 1 -- show the country moving in the opposite direction.
Prime Minister Narendra Modi has been pushing companies to establish more manufacturing operations through his Make in India program. Higher duties may incentivize Apple to expand its operations in the country, along with rivals such as Samsung Electronics Co., Xiaomi Corp. and Oppo.
Apple also has been lobbying the government to set up its own retail stores in India. The country now requires phonemakers to source 30% of their product domestically to set up single-brand retail stores, and assembling in the country allows companies to comply with this mandate.
Apple began making the iPhone SE in the country last year through partner Wistron Corp., but in limited quantities.
It has been over a year since the U.S. tech giant sought a series of sweeteners from the government to bring its iPhone assembly to the country, among them a 15-year tax holiday on importing components and equipment.
By Saritha Rai