The prices of smartphones continue to rise after a 15% increase in the first month of the current fiscal year (March 21-April 20) compared to the previous month (Feb. 20-March 20).
Market players and importers believe that the prices of smartphones will continue to rise and experience a 5-10% increase in the coming weeks.
A market survey shows prices have increased by about 30% in the past three months, Peivast reported.
Last year, the mobile phone market was relatively calm and prices were competitive. However, the situation took a turn for the worse in the fourth quarter of the fiscal 2021-22 (Dec. 21, 2021-March 20).
During the period, Majlis Joint Commission increased the import tariff on smartphones worth over $600 from 6% (4% customs duty + 2% commercial tax) to 12% (4% customs duty + 8% commercial tax).
As subsidized foreign exchange ($1=42,000 rials) was allocated for smartphone imports before the fourth quarter, the 6% increase in import tariffs was not noticeable.
However, when the subsidy was abolished as per the budget law of fiscal 2021-22 and the customs duties on imported goods had to be calculated at the ETS rate (the average open market and Nima exchange rates in effect on three days before calculation), sellers faced uncertainty.
In the ninth month of the previous fiscal (Nov. 22-Dec. 21, 2021), the subsidy was removed and the import tariff for smartphones was calculated based on the ETS dollar.
Another difference in the smartphone market is that importers must pay the difference in the value-added of imported products to the government before importing within three months.
Many importer companies, despite the same difference in value-added, sold their goods with the lowest profit. But currently, fewer companies can import goods and they are selling their goods at a higher profit because importing smartphones is no longer profitable.
All of this is moving the calm and stable mobile market toward uncharted territory and turmoil.
Premium Cellphones Worth $940m Imported in Nine Months
Premium cellphones worth $940 million and costing over $600 apiece were imported during the last fiscal year’s first nine months (March 21-Dec. 21, 2021), according to the spokesman of the Central Headquarters for Combating Commodity and Currency Smuggling.
“Due to the high forex outlay of the premium smartphones, the parliament had increased customs tariffs for phones worth over $600 from 5% to 12% in the fiscal 2021-22 budget law. But unfortunately, it was not effective in reducing the attractiveness of premium phones,” Hamidreza Dehqani-Nia also told the news portal of the headquarters, Epe.ir.
During this period, smartphones priced over $600 used 30% of mobile currency resources, i.e., near $1 billion, but only covered the needs of 5% of the population. About 90% of imported phones costing over $600 belonged to Apple products.
Imports of these phones during the period increased by 40% compared with the total imports in the 12 months ending March 20, 2021.
In the budget bill submitted by the government for the fiscal 2022-23 (starting March 21, 2022), the clause related to collecting 12% of the import fee from premium smartphones has been removed. Therefore, the import fee of these phones will be 5% in the next fiscal year, similar to that of other phones.
“As a result, even with the foreign currency problems, more resources will be allocated to premium smartphones, while with the same resources, more phones could be imported. It is also possible to allocate foreign currency to import essential goods, medicines and production inputs,” the spokesman said.
Dehqani-Nia noted that taking into account 10% as customs duty and tax on commercial phones, and 10% as a viable supply chain profit, the current price of a $600 smartphone in the market is about 180 million rials ($644), which is beyond people's purchasing power for a smartphone.
While a majority of people can’t afford premium smartphones and rely on brands with cheaper prices, the import of 27 smartphone models produced by Xiaomi, OnePlus, Realme and Nokia (which produce cheaper smartphones) has been banned due to an inbuilt difficulty in contacting the country's emergency numbers.
In a letter to the Ministry of Industries, Mining and Trade, Director General of Communications Regulatory Authority of Iran Garshasb Jamshidnejad had proposed the ban regarding the registration of import orders for three models of Xiaomi 11T, 11T Pro and OnePlus 9 smartphones.
In another letter to the Mobile Importers Association, the CRA chief had called for a ban on 24 other phone models because of their inability to contact the country's emergency numbers.
