Daybreak - India's newest iPhone prices hurt the people selling them, buying them and even taxing them

Episode Date: September 16, 2026

Apple's newest iPhones landed in India with price hikes as high as 41%. And for the first time in years, there was no discount on older models to go along with it.The memes pretty much came immediately. From selling kidneys to choosing between buying a phone or an Alto, a Royal Enfield or a vacation. People also couldn't help but notice that Apple's first foldable, the iPhone Duo, costs a lakh more in India than it does in the US.But Apple is just a symptom of a larger problem. A global memory chip shortage is squeezing every phone maker and India's own tax structure is making it worse here than almost everywhere else. It's costing consumers, retailers and even the Government, which is slowly losing tax revenue to the grey market the price difference between India and elsewhere creates. On this episode, host Rachel Varghese explores why India got hit the hardest and what happens when the workarounds like cheaper 4G phones, secondhand devices, and EMI, run out of road as well.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

What would you do if you had three lakhs to spare? Would you buy a small yet dependable entry-level car like an auto? Or maybe even a royal infield? Or maybe it's time for a really nice vacation to Thailand. Or maybe you should be practical and just invest in stocks or gold. Or would you spend all of it on a single phone? That's the question several Indians have been asking each other all over social media. ever since Apple launched its latest models last week.

The real scene stealer in the new lineup was the company's first foldable phone, the iPhone Duo. And its starting price in India? 2,99,900 rupees. Q memes with a kidney listed as a checkout payment option. And I even saw an Instagram post about how the phone is called Duo because that's how many kidneys you'd need to sell to actually get your hands on it. And it's not just about the duo. Even the other two models released alongside it,

the iPhone 18 Pro and Pro Max, also start at quite a steep price tag of almost 1,000-65,000 and 1,080,000. But the thing that's actually catching everyone's attention is the fact that for what feels like the first time, Apple isn't discounting its older models to mark this new launch. That's usually what the company's move is, so that it can clear its inventory and give users a chance to upgrade or enter the ecosystem more affordably. But this time, Apple is increasing prices across its lineup instead.

Now, Apple has been signaling this increase for months now. The reasoning is that there's a memory shortage that has hit every phone maker this year as chipmakers redirect their resources towards the increasing AI demand. Phone prices have been increasing across brands and air. around the world. Still, a Reuters report pointed out that Apple's India price hike has been one of the steepest globally speaking. While the US, for example, saw an increase of 10 to 21 percent, India, on the other hand, saw an increase of 20 to 41%. And it's not just about what consumers are willing to pay. The underlying memory shortage squeeze has already caused store footfalls to

reduce for retailers. Plus, early market research from IDC India, and counterpoint research suggests that unit sales for Apple may fall for the first time ever in India. But this goes beyond Apple. Mobile sales in general in India had dropped by 9% in the first couple months of this year. Which is why the Indian Retailer Association has been petitioning the government since last year to ease taxation on phones because store footfalls have been falling significantly as prices increase and consumers have been putting off upgrading their phones or have been choosing second-hand models. More recently, the association has also explicitly pointed out

that the current tax structure is causing the government to lose hundreds of crores because of the increase in grey market sales of phones. But if the memory shortage is a global phenomenon and prices are increasing across brands and all over the world, why was Apple's India hike one of the biggest and what happens when cheaper alternatives eventually run out? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Trey Gers, and every day of the week, my co-hosting Tashram and I will bring

you one new study that is worth understanding and worth your time. Today is Thursday, the 17th of September. Everyone has been talking about Rambocalyps. And how could they not, when prices for stored trips have almost quadrupled since September last year. As a result, phone makers everywhere have had to increase their prices to accommodate increased manufacturing costs. In India, counterpoint's research shows that prices have increased by more than 20%. On top of that, the Ken's own reporting shows that many makers are even compromising on

manufacturing costs by cutting corners elsewhere in the phones make. A chroma salesperson told my colleague Saakshi Sadashiv in July that phones are becoming heavier, peak brightness is coming down, selfie cameras are losing resolution and cheaper camera sensors are replacing better ones despite carrying the same megapixel count. And that isn't even all of it. Two other salespeople from Reliance Digital this time told Saakshi that even things like water resistance has been weakening. Studio speakers are being replaced by mono audio,

charging speeds are slowing down, and premium finishing touches like stronger display protection and inbox accessories are all being phased out as well. Now, like I said earlier, this is happening globally. Apple's own price hikes across its lineup reflect that. The iPhone 16, which is a two-year-old model which has seen no updates in specs whatsoever, saw its price increase in India last week by $20,000. That's almost a 30% increase from its price before.

In the US meanwhile, the same phone saw an increase of $100, which is about 14% of its price before. In fact, the duo's price in the US is roughly a lack cheaper than it is in India. And by the way, it's not just Apple. The US has seen an overall price increase of only 5% in smartphones this year and China 10%. The average global rate of increase is 15%, which is a lot lower than India's 20% plus. So why the difference? Well, part of the reason is India's unique stacked tax structure, along with a falling rupee.

You see, despite the fact that Apple has tie-ups with manufacturers in India like Tata and Foxcon, Duo itself was not assembled here. This is usually the case for new models had a new technology, likely because the tech is proprietary and so the company is more likely to trust and train workers at a local factory before international ones.

So Duo was specifically hit by India's staff taxes. Here's what that means. About 15% of a basic customs duty is levied on the phone because it's being imported into the country. And then on top of that, an 18% GST is calculated on the new value after the duty, not the original price.

Even the iPhone 18 Pro and Pro Max, despite being assembled in India, were affected by these taxes, making them roughly 46,000 to 51,000 rupees more expensive here than in the US. Now, you might be wondering why that's the case, because if the phones are resembled here, then that means there shouldn't be any customs duty on them, right? But the price is still much higher. And that's because some of the phone's key components are imported and the same tax structure I explained earlier applies to them, though it's not always as high as 15% customs. So why hasn't the government cut these taxes or given companies some kind of tax holiday,

especially after having quoted Apple's manufacturing investment in India for years? The thing is, it has, but only on the components, not on the finished devices themselves. Duties were first cut in 2024 and then again in 2025 and 26 on specific components, like circuit boards, camera parts and cables, bringing down their duty costs to almost zero. But analysts have noted previously that those cuts would likely only impact 3 to 4% of the build of materials cost and that they were not enough to offset the cost increase for other components. That's why the ICEA or the Indian Cellular and Electronics Association has been pushing for tax cuts on the Finnish devices themselves. In fact, the body which represents Apple, Foxcon,

Vivo, Opos, Jaomi and other industry players wrote to Nirmala Sita Raman just this month asking for the tax to be reduced from 18 to 5%. The letter states explicitly that even iPhones made in India are sold at exorbitantly higher prices, mainly due to the taxes and the depreciation of the rupee. The letter also flagged that the supply of phones priced under 10k rupees has fallen to less than 5% of the market. which means the consumer segment that used to rely on these type of budget phones are now forced to buy more expensive ones.

And while Apple's new prices is making all of this more visible, this problem has been plaguing sellers since last year. The All India Mobile Retailers Association or AIMRA has reported a 30 to 40% drop in store footfall since last November. The association even rode to Sita Raman back in January last year before the memory supply crunch started manifesting as strongly as it has, asking for the same 5% tax as the ICEA. Their reasoning was that the lower tax would, A, help with affordability and B, push less customers towards the grey market.

Then, another letter from early this year noted that roughly one in every five of India's monthly phone sales are siphoned off through grey market and export misuse routes leading to GST and customs revenue leakages running into hundreds of crores of rupees annually. Already, in reference to Apple, there are jokes about exactly this on the internet. Because Duo is significantly cheaper in the US than here, consumers have already observed that flying to the US, buying the phone and then flying back can actually save an Indian buyer money.

Prashant Bora, the managing director of Bora Multicorp, a merchant exporter of smartphones told E.B. in a report that a price gap this wide actively funds the grey market. He explained that every time official pricing diverges this sharply from Dubai or Hong Kong, informal imports

fill the gap and authorised retail and the government both lose out. And other than pushing people towards the grey market, many consumers have also started moving to secondhand and even buying 4G phones instead of 5G. But the problem is,

that those cheaper alternatives are also going to run out soon. India's 5G services officially ruled out in October 2022. It's been four years since then, and 5G coverage has reached more than 99% of the entire country's districts. And still, counterpoint's research from this July showed that brand production of 4G phones increased by 40% quarter on quarter in the second quarter of 2026. A business standard report from early this month noted that despite

the memory shortage pushing up prices worldwide, there's still roughly a 22,000 rupees gap between the average prices of 5G phones and 4G phones in the same quarter. But this alternative for consumers already has an end date insight. One of the world's largest chip makers, Micron, has already finished its final shipments of the LPDR4 memory this year. Samsung has also discontinued production for the same memory and is only fulfilling existing orders until the end of this year. Now, LPDDR4 is an older generation of lower power memory.

Most 4G phones are configured around this particular memory interface. Counterpoint noted that redesigning 4G chips to work with LPDR5, which is the newer generation, will be quite costly. Which is why it expects smartphone chip makers to face out 4G chips over time and rely more on 5G chips that are based on the LPDDR5. So eventually 4G phones will be harder to find in the market. That takes us to the second-hand and refurbished segment. Sales in the segment actually increased by 13% year-on-year in the first half of 2026,

even as the sales of new phones fell by 11%. And of course, you won't be surprised to know that Samsung and Apple also dominate the second-hand segment at 30% and 23% respectively. In fact, you can also see how popular secondhand has become in the shipments for refurbished channel displays, which were 9 million more in units than new device panel shipments. But, of course, the supply of secondhand devices is entirely dependent on how many people actually upgrade their phones. And the more people who hold on to their current models means that there will be fewer used phones in circulation. Meanwhile, new phone purchases even right now are increasingly dependent on financing. Business Standard reported that this year, 42% of India's smartphone sales were financed.

In fact, Apple had factored in how popular financing was in India, especially for its premium models, all the way back in 2019. It used to have a five-year deal with HDFC until 2024, which gave Apple buyers exclusive cashbacks for all those years. In FY 2025, Apple even sold $8 billion worth of products in India. We actually covered this on a daybreak episode, which I'll be linking below. Also, Apple has the longest average EMI timeline out of all brands at more than 17 months, which is in itself a cost of some concern.

Because ever since, the RBI stopped lenders from locking devices remotely after MESDMI's, a debt collection startup has reported a 20,000, percent month-on-month rise in defaulters. This has actually made the RBI bring back this framework effective from next year. It will allow device locking in a limited manner, only after 30 to 60 days of overdue payments and essential functions will still be available to the user. And obviously, this is putting consumers in a very tricky position. As phones are getting more expensive, the single most accessible way to meet those scores

could actually complicate the access to a device which we're increasingly becoming more reliant on. And out of all these players, from the consumers going into debt or opting for downgrades, retailers losing customers and the government losing revenue, the only player that comes out looking mostly okay is Apple. Even with its unit sales dropping by the mid-single digits based on projections, value growth might actually increase by 6 to 7% this year.

Which means while the memes and the jokes do not, indicate that Apple may be losing some of its brand goodwill, the way it's gone about pricing was a calculated bet. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts.

To subscribe, head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague Rachel Vargis and edited by Rajiv Sien.