NEW DELHI: Smartphone maker Apple has singled out India for raising the price of iPhone 4 while reducing its storage capacity, soon after launching the new model iPhone 4S in the domestic market at the highest price in the world. The company has raised the price of iPhone 4 by 10% to Rs 37,900. Yet, Indian customers are now getting an 8GB handset, instead of the 16 GB handset they could buy until last week for Rs 34,500. This is a departure from Apple's practice worldwide. In Singapore, for instance, it reduced the price of its earlier model by S$100 to S$788 when it launched the iPhone 4S. Often, it also gives freebies to customers who buy earlier models when it launches the new product at similar price points.

The new prices make it cheaper for Indian customers to buy the iPhone 4 from abroad. The unlocked version of this handset is 33% cheaper in the US and Hong Kong at Rs 28,500, while it costs Rs 31,500 in Singapore. Experts say the disparity in pricing is resulting in a thriving grey market for iPhones in India. An industry executive familiar with Apple's pricing strategy told ET that the weaker rupee could be behind the hike. "The rupee has been the worst performer among the markets Apple operates in. The weaker rupee, which has fallen about 15% in the last three months, has also forced other handset makers to increase prices in India," this executive said. Another executive said the price hike is aimed at ensuring that the earlier model does not cannibalize sales of the iPhone 4S. "Apart from a newer software version and faster speeds, the 4S is largely identical to the earlier model.

At the earlier price point, the iPhone 4 would have cost Rs 10,000 less than the 4S. This could have resulted in the flagship product registering lower sales," the executive who did not wish to be named reasoned. However, the company has not attempted to prevent possible cannibaliation of device in any of its other markets. Apple did not respond to a detailed query from ETon the issue. Last week, the company launched the iPhone 4S at a starting price of Rs 44,500, while the 32 GB model costs Rs 50,900 and the top-end 64 GB model comes for Rs 57,500. According to Canalys estimates, Apple sold about 100,000 handsets in India between July and September, giving it a 3.6% market share in the smartphone segment.