Sure it will cost $505.99.
No, why it only costs $200 in US.
Sure if you are willing to steal it!

My brown Indian bros.. here is how it works -

You walk in the funky looking iStore, pick the cool looking iPhone (8GB) after talking to the people dressed in blue iT-shirts (the geniuses as they like to call themselves, so much for being modest) at an ultra cheap price of $199.00 + $15 (7.5% taxes).

The iGenius now asks you to activate the phone with a 2 year contract, they have these orange iT-shirt dudes (don’t know what they are called) to stop you from taking the phone outside the store without activating.  You activate it at $35 and pay the first month due of $69.99/month + some million type of taxes = $81.99.  Your total so far = $330.99

aha .. freedom - or so you think.

Now either you keep paying $69.99 per month or since you are buying the phone for someone in India you decide to deactivate your contract by paying $175.  Your total my friend comes out to be = $505.99 + unlocking the phone.

Cost of owning an iPhone from US (@$1 = Rs.43) = Rs. 21,757.57  + unlocking + no-warranties + customs chori + read the confidentiality agreement that At&t makes you sign, I am sure there is something illegal about unlocking the phone.

Cost of owning an iPhone from India = Rs. 31,000 + mental peace for me