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India hikes import tax on cellphones, liable to hit Apple's iPhone hardest

The Indian government is raising import taxes on cellphones from 10 to 15 percent, which could put pressure on Apple to accelerate local iPhone manufacturing.

The shift comes as part of a general hike on import taxes, including a similar increase on video cameras and a TV tax doubled to 20 percent, Reuters reported. Indian Prime Minister Narendra Modi has championed a "Make in India" program designed to spur local manufacturing.

Conterpoint Research notes that while 8 out of 10 phones sold in India this year were made locally, about 88 percent of Apple's iPhones are imported, since only the SE is assembled in the country. Most of company's assembly work happens in China.

Apple is likely to raise prices on iPhones to compensate —a serious matter, given that even the SE is too expensive for most Indians. Over 75 percent of smartphones sold in the country cost less than $250, and the iPhone has a marginal share of the local market.

The company has pursued a variety of concessions and financial handouts in exchange for growing local manufacturing. The Indian government, though, has allegedly held fast and refused to offer Apple anything unavailable to other multinational businesses.

Apple is rumored to be working on an "iPhone SE 2,", which could be assembled in India like its predecessor. The device could ship in the first half of next year, and include upgrades like an A10 Fusion processor and a 1,700 milliamp-hour battery, but will probably forego features like wireless charging and the iPhone X's Face ID.