Apple has an out of warranty or not covered under the warranty "repair" price, which pays for an exchange at a discounted price off the retail sales price.
If you own an iPhone that is ineligible for warranty service but is eligible for Out-of-Warranty (OOW) Service, Apple will service your iPhone for the Out-of-Warranty Service fee listed below.
iPhone model Out-of-Warranty Service iPhone 5 $229 iPhone 4S $199 iPhone 4, iPhone 3GS,
iPhone 3G, Original iPhone
Apple reserves the right to determine whether or not your iPhone is eligible for Out-of-Warranty service. iPhones that are repaired or replaced have a 90-day limited hardware warranty or assume the remainder of your standard warranty or AppleCare service contract coverage, whichever is longer.
Apple will not accept a shipment from India. You will need to ship the iPhone to someone you know in the U.S. who can take it to an Apple Store for you. If Apple approves the exchange, this person must ship the iPhone back to you.
Thanks for your reply.
In case I ship my phone to my friend in US, does he has to produce some ID proof of mine or its fine for him to just take phone with full box and accessories to Apple store and let them determine what needs to be done.
In addition, In case Apple suggests to replace my phone with an undamaged one, will that be a brand new phone or re-furbished and will it be given on the spot in the Apple store itself?
If you have the receipt to include with the shipment to your friend, it won't hurt but shouldn't be required. If Apple approves the exchange, only the iPhone will be exchanged - not all package contents so you only need to return the iPhone preferably in the retail sales box.
As with an exchange under warranty, an exchange under Apple's OOW program will be a new or refurbished iPhone with no way to tell the difference. The exchange is called a service unit and is provided in a plain box that includes the iPhone only. If approved, it will be exchange on the spot in the Apple Store.