Will iPhone prices fall once production begins in India?

After its long tussle with the Indian government Apple has, in all probability, decided to set shop in India. The company has been facing trouble with Indian bureaucracy over setting up a manufacturing unit in India.

However, it seems Apple has managed to turn the tide in its favour and is most likely to begin production in Karnataka.

What does this development mean to the consumer?

According to a CNET report, in 2016, Apple products were most expensive in India. There are a couple of reasons why this is the case. Firstly, the American company needs to pay heavy custom duty while importing their products and secondly, they have to rely on a heavy network of retailers in India which ultimately reduces their profit margin in the country. To maintain that margin and keep a buffer between weakening rupee and their desirable profit, the company has prices higher than other countries.

The new trend however, is seeing a major shift in favour of India. No matter how big a company, ignoring the Indian market can be a detrimental move for any international smartphone brand and Apple does not want to be left behind in the second largest smartphone market. The company will definitely face the onslaught of Chinese smartphones as competition but the revised prices might give its sales the required boost.

The most obvious and consumer-centric change will be in the pricing of the iPhones manufactured in India. The company will benefit out of lower taxes and no custom duty which will directly impact the prices of the devices.

The company will face one major problem, though. It still needs to source 30 per cent of its components from within the country. This was the problem that caused delay in the first place. However, the company may be able to overcome this challenge. Wistron Corp and Foxconn, which have built iPhone parts in the past, already exists in India and these companies can pull Apple out of this situation.

Does this mean Apple is sure to drop prices of all iPhones?

While the prices might go down for a few Apple iPhones, we cannot say the same for the company's flagship devices iPhone 7 and iPhone 7 Plus. The Cupertino giant will test the waters by manufacturing midrange devices like iPhoneSE. Hence, the only devices that will get a substantial cut in prices will fall in the compact form factor.