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Price increase: Other smartphone makers won't take the Apple route

The move comes even as rival Apple has increased the prices of all its top models, excluding the iPhone SE

Arnab Dutta & Viveat Susan Pinto  |  New Delhi/Mumbai 

Price increase: Other smartphone makers won't take the Apple route

Despite a five percentage point increase in the basic customs duty on mobile handsets, makers such as Xiaomi, and are not mulling price hikes. Instead, the plan, according to top industry sources, is to absorb the duty hike to protect price points in a highly competitive market. The move comes even as rival has increased the prices of all its top models, excluding the SE, which is assembled in India. The hike is to the tune of 3.5 per cent and is with immediate effect. However, other players in the Rs 45,000 and above super-premium segment may face challenges. For example, Sony and continue to import the majority of their handsets into the country. Sony imported some 20,000 devices last year and shipped in 37,000 finished mobile phones. These two might have to revise their pricing strategies in India and could hike prices soon, sources said. Samsung, on the other hand, assembles all its devices, including the flagship S and Note series of smartphones, in India. While had chosen to pass on the duty hike to consumers, for Xiaomi, and that option did not exist, sources said. The reason being the nature of the Rs 1 lakh crore market in India.

The trend, an executive told Business Standard, was to provide an “A-list model at a B-list price”. “Consumers have now become more price and value conscious and are looking for that are affordable, yet loaded with high-end features. This space has become increasingly competitive and each brand is coming out with products that address this need,” Amit Gujral, chief marketing officer, LG Electronics India, had said in an earlier conversation with Business Standard. that have pushed the pedal on this “affordable premium experience” are Xiaomi, and and even and Lenovo. It is unclear whether the last two will go in for price hikes following decisions by Xiaomi, and not to do so. Executives at were not immediately available for comment. Sudhin Mathur, managing director, Motorola Mobility India, said, “Our journey of making in India began three years ago and we are well on our way to becoming a fully locally manufactured (brand).” Most makers today source the majority of their requirements locally barring Apple, which has restricted local production to the SE. Industry sources said around five per cent of volume sales of brands such as Xiaomi, Oppo, and Lenovo were of imported handsets, implying that these saw sense in switching to local production. Apple, on the other hand, imports over 80 per cent of its requirements. The question is whether the US major will follow its global counterparts in India. Sources said the Cupertino-based major’s manufacturing plans in India were still unclear. The super-premium segment contributes Rs 8,000-10,000 crore by value and 2-2.5 per cent in terms of volumes to the domestic market. While might not switch to local production immediately, sources said it would be conscious of whether duty hikes such as the one announced last week made its products unaffordable beyond a point.

First Published: Wed, December 20 2017. 01:49 IST
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