India raises import tax on mobiles; move to hurt Apple

India has increased the import tax on dozens of electronic products such as mobile phones and television sets, a government statement said, to help curb supplies from overseas and build up the domestic industry.

The rise in tax from 10% to 15% on handsets will make imports of phones—including most of Apple’s iPhone models—more expensive at a time the company’s revenue growth is slowing in India’s $10 billion smartphone market.

Pankaj Mohindroo, president of the Indian Cellular Association, said on Friday the tax hike will boost domestic manufacturers who are making about 500 million cellphones a year, more than double the output three years ago. Eight out of 10 phones sold in 2017 have been made locally, data from Counterpoint Research showed. Samsung assembles in India most of the handsets it sells in the country.

Apple currently only assembles its iPhone SE models in India and imports its others. The firm has sought a range of incentives and tax relief from the government to expand its manufacturing, but government officials have said they are unlikely to make exemptions for Apple.

Tarun Pathak, an associate director at Counterpoint Research, said the government’s new tax notification will impact mobile phones companies heavily dependent on imports.

“It will impact Apple the most as the company imports 88% of its devices into India,” he said. “Either this will lead to increase in iPhone prices or force Apple to start assembling more in India.”

Aside from cellphones, the government also raised the import tax on video cameras to 15% from 10% and doubled the one on television sets 20%, its statement said.