Budget 2024: How Apple Can Save Up To $50 Million Per Year With BCD Cut On Mobile Phones

Apple might reduce its annual expenses by approximately $35 million-$50 million if it immediately begins assembling its iPhone Pro models in India, industry experts told ABP Live on Tuesday.

Apple currently has a relatively small but significant portion of India's smartphone sector, commanding approximately six per cent of the overall market.

Source : Krishna SinhaChaudhury/ABP Live

For those wondering if smartphones will get cheaper in India, in the wake of Finance Minister Nirmala Sitharam announcing several reductions in BCDs (basic customs duty) on multiple items on Tuesday, July 23, industry experts told ABP Live that the cut on basic customs duties on smartphones, chargers, and PCBA will not have any major impact on the prices of smartphones in the country. Interestingly, Apple might potentially reduce its annual expenses by approximately $35 million-$50 million if it immediately begins assembling its iPhone Pro models in India.

"For Apple, this (cut in basic customs duty) could translate to $35 million-$50 million per year in savings until it starts manufacturing Pro models right of the bat," Neil Shah, Vice President, Counterpoint Research told ABP Live.

10-12% iPhones Imported Into India Annually

On an annual basis, a notable fraction of iPhones in India -- between 10 per cent-12 per cent -- are imported.

In terms of market presence, Apple currently has a relatively small but significant portion of India's smartphone sector, commanding approximately six per cent of the overall market, according to Counterpoint Research.

This move could particularly benefit certain smartphone manufacturers, especially those that rely on importing fully assembled devices. Companies like Apple, newcomers to the market without local production facilities, or established brands importing limited quantities of high-end models such as foldable smartphones, might find significant cost reductions.

These savings would primarily apply to firms bringing in Completely Built Units (CBUs) from abroad, rather than those with domestic manufacturing operations, the market research firm noted.

Meanwhile, the reduction in BCDs could potentially lead to a modest reduction in smartphone prices, with consumers seeing a decrease in prices of around 1 per cent-2 per cent. However, the actual impact on retail prices is not guaranteed, as it ultimately depends on whether the original equipment manufacturers (OEMs) choose to transfer these cost savings to their customers.

"We may expect a price cut of 1-2% on average from this move, however, this depends on OEMs if they want to pass this to end consumers. In the lower price segments, we may not see this as in these price segments, the margins are very low," Prachir Singh, Senior Analyst, Counterpoint, told ABP Live.

"On the overall electronics manufacturing, the government has focused on a very key area, which is upskilling. Announcements regarding upskilling show the government's intent to grow a high-skilled labour force and will help the electronics manufacturing sector secure high-skilled local talent," Singh added.

A Little About BCD

For those unfamiliar with the term, BCD stands for Basic Customs Duty. It's a form of tax applied to products brought into the country from abroad, calculated as a percentage of the item's final assessed value. When this duty is lowered, it typically results in a decrease in the overall cost of imported goods. Consequently, a reduction in BCD can lead to lower prices for these imported units in the domestic market.