India to miss iPhone price cut

Entry-level phones now cost six times the US version.

Apple’s decision to slash its entry-level iPhone (8 GB version) in the US market will not trickle down to India anytime soon.

Leading handset retailers in India said they had not received any information from the two telecom operators, Bharti Airtel and Vodafone-Essar, which are also sole distributors of the handsets in the country.

Executives at Bharti Airtel said they were yet to receive any communication from Apple about the price cut. Vodafone-Essar executives declined to comment.

“We are selling both the models, 8 GB and 16 GB, at the earlier prices,” confirmed Sachin Seth of Toughies Telecom, a Delhi-based handset retailer. Many other retailers, who sell around 50-100 iPhones a month in Chennai and Mumbai, said the same.

This means Indian consumers will continue to pay a fortune for the iconic gadget. In fact, the phones will now cost six times more than the price at which it is available in the US.

On Tuesday, Apple slashed prices of its entry-level iPhone to $99 (around Rs 5,000) from the earlier $199 in the US market. In India, the model is priced at $660 (Rs 31,000). The higher version of iPhone (16 GB) is priced at $299 in the US, against $766 (Rs 36,000) in India.

The reason iPhones are more expensive in India is that US subscribers get iPhones at a significantly subsidised price from AT&T, the sole provider of the handset in the US. Subscribers have to sign a two-year service contract with AT&T for the service, and the service provider levies a cancellation fee of $175 (Rs 7,000) if the subscription is discontinued.

In the UK, the phone is given free by O2, while T-Mobile sells it for a meagre ¤1 (Rs 76) in Germany. Cancellation charges are applicable (depending on the region) in these two countries also.

In India, Bharti Airtel and Vodafone-Essar do not subsidise the handsets, because subscribers often do not comply with penalty clauses, leading to lengthy court battles.

Moreover, scores of unorganised retail outlets in India are able to crack the operator code on handsets so that cheaper US "imports" can be used as well. As a result, operators do not find it viable to subsidise iPhones.

Meanwhile, there is some good news for iPhone enthusiasts in India. Apple will launch the iPhone 3GS, billed as the "fastest, most powerful iPhone yet," on August 9.