India relaxes sourcing laws
The Indian (INDA) government has relaxed its 30% sourcing laws with regard to foreign-owned companies. India’s sourcing laws require foreign manufacturers to source at least 30% of its goods domestically. The government now allows companies to temporarily meet this requirement by purchasing Indian-made goods and selling them in overseas locations.
Companies can take advantage of this rule for the next five years. After that, they need to source 30% of retail goods sold domestically. Apple (AAPL) is looking to expand operations in India to further penetrate the country’s smartphone market where the iPhone is still looked at as a niche product. Apple (AAPL) started assembling the iPhone SE in India in May 2017 and is now looking to open stores in Mumbai, New Delhi, and Bangalore.
Increase in tax on imports
iPhones have now become more expensive in India after the government raised import taxes on mobile phones. India has increased taxes on imported items to encourage domestic manufacturing of products. Customs duties on mobile phones have risen to 15% from 10%. That has led Apple to increase prices on its iPhone models an average of 3.5%.
Apple is the world’s second-largest mobile subscription market. More than 750 million people own either a basic phone or a smartphone. According to IDC (International Data Corporation), China’s (FXI) Xiaomi and Korea’s Samsung (SSNLF) are the top smartphone manufacturers in India with shares of 23.5% each at the end of 3Q17. Apple is eyeing the Indian region to capture a bigger share of the smartphone market. Apple’s share in the Indian smartphone market is reportedly less than 3%.