Quite a few countries have car industries which work roughly like this -- the local VW plant will cost twice as much to run (per car) as the mothership, roughy matching a 100% import tax. (Although in reality there is often more to the story, like producing exactly one model there & exporting those for credit against imports...)

Then there is 12% tax on top of that.

The import tax in India is now 20%. Lets suppose Apple could increase market share in India to match that in China by reducing prices by the 20% tax, and compare that to keeping the 20% as extra profit but not increasing market share.

2% market share on 50% profit margin (existing 30% margin plus tax margin of 20%) sounds pretty good. However 30% profits on 7% market share yields more than double the overall profits.

Finally, all the arguments you make for charging more apply equally well anywhere in the world. So why doesn't Apple charge India prices everywhere in the world already? A simple argument that increased profit margin always beats higher sales implies that the perfect price point is infinity. At some point this strategy must yield diminishing returns.

I live in Sweden, and the pricing will go like this:

- The US: $999

- The EU: €999

- Sweden: 9900 SEK

Depending on currency rates, it can become up to 30% more expensive.

My favorite discovery was around the time of the trashcan MacPro. It was cheaper to fly to New York, buy the Mac, and fly back than to buy one in Sweden. And you would still have money left over.