Apple iPhone 6S Price In India Spurs Gray Market Sales, Retail Chains Worry: Report

BANGALORE, India -- Some Indian buyers are willing to brave the risks attached to buying the expensive iPhone 6S on the gray market, available at some discount, driving business away from authorized retail chains and other channels selling Apple Inc.'s latest smartphone, the Economic Times reported Tuesday, citing industry executives.

The "gray market for the new iPhone is booming," the chief executive of a large mobile phone store chain told the newspaper, which didn't name him. Unless Apple steps in to bring down the official price of the iPhone 6S in India, some consumers will risk the gray market or simply wait for the eventual discounts online, the newspaper cited the executive as saying.

Over the last three years, Apple has moved from selling a negligible number of its smartphones in India to projecting sales of around 1.3 million handsets in the three months since the Oct. 16 launch of the iPhone 6S in the country. The launch was preceded by a blitzkrieg of ads on television, radio, hoardings at strategic positions in many cities, and offers by carriers.

"After Apple announced the prices for the new iPhones in India, it was pretty much expected that the gray phone market will boom considering the price difference from not just last year’s iPhones but also the prices being significantly higher than other countries," Kiranjeet Kaur, a Singapore-based research manager at market research company IDC said in an email to International Business Times.

For example, in Singapore the launch price of the 16GB version of iPhone 6 was 988 Singapore dollars ($715) a year ago, and the iPhone 6S is priced at 1,048 Singapore dollars ($758). For India, the corresponding prices are 53,500 rupees ($825) and 62,000 rupees ($956). "The gap is wider when we compare against U.S. prices," Kaur pointed out.

From May 2014, when India saw a new government sworn in, the Indian rupee has fallen about 11.4 percent to Tuesday's closing price of 64.96 rupees to a dollar. In its budget for the current fiscal year, the new government also raised excise duty on mobile handsets to 12.5 percent from 6 percent, in a move to promote local manufacturing.

The new iPhones could be more expensive than last year’s variants because of the more higher-end components, but the rupee depreciation and the higher taxes would definitely have a role to play, Kaur said.

Kaur expects Apple to "maintain a healthy double digit year-on-year growth rate, as Apple continues to be an aspirational brand." Moreover, the fact that Samsung's Galaxy S6 didn't perform as well as expected, has also helped Apple retain its brand image as one of the most premium smartphone sellers, she said.

In India, Apple has followed a strategy of officially lowering the price of older models once it launches the latest one. Analysts believe that many first-time buyers will be quite content to buy an iPhone 6, which has the same screen size as the 6S. In some cases those who might be just as happy with the smaller screen of the iPhone 5S, which too will offer the iOS 9 experience, will see that phone as a bargain.

As to the iPhone 6S, many deals are also available on eBay Inc.'s India site, offering "new, imported, undamaged" units for prices that are significantly lower than the official price. That these handsets are sold only with the seller's warranty -- typically for six months -- and not Apple's manufacturer's warranty, usually for one year, is also clearly listed.