iPod arbitrage

A couple weeks ago I blogged about a new Apple store that opened up in Bombay, a couple of my friends and relatives visited and their first response was “Apple is pricing their products too high in India.” I recently had a chat with someone from Apple India and he went through the pricing structure for an iPod and showed it was really all the taxes you pay that inflate the price. In the US a 80GB 5.5gen iPod goes for USD 349.00, in India the same iPod is INR 23,600 (which works out to USD 517 at the current exchange rate of Rs. 45.60). Initially it looks like Apple is charging an extra USD 168 to buy the same product in India. But in reality Apple charges the same price, it’s all the additional taxes, a total of 45.5%:
27.5% import duty on MP3 players
12.5% value added tax
5.5% octroi – local municipal tax
Apple Store – USA
Apple Store – India