Mobile handsets to cost 10-26% less

Mobile handsets have become more affordable with all leading manufacturers, including Motorola, Nokia, Siemens, Alcatel, Samsung, Sony-Ericsson and Panasonic announcing price cuts in the range of 10 to 26 per cent across all segments.

The moves follows the reduction of basic Customs duty to 5 per cent along with the abolition of special additional duty (SAD) on mobile handsets, announced by the Centre in January.

The companies have also projected a three-fold expansion of the handset market from $1.4 billion in 2003 to $3.4 billion by the end of 2004.

Pankaj Mohindroo, president of the Indian Cellular Association, said: "We have set up a committee under the ministry of communications to work out a framework to promote local handsets manufacturing. The committee, with representatives from the industry and the government, will submit its report within 8 weeks". At least three manufacturers were keen to start local manufacturing, he added.

Mohindroo also said there would be a 20 per cent higher growth in the handset market because of the price cuts announced today.

As per the revised prices, an entry level Motorola C 350, for instance, would cost 20.73 per cent lower at Rs 5,545 while the popular Nokia N 2100 would cost Rs 5,299 instead of Rs 5,949.

The maximum reduction will be in the case of 'Nokia N 6100', the price of the set has been reduced to Rs 11,370 from Rs 15,499, or 26 per cent.

According to ICA, by 2007 the domestic GSM handset market will grow to $6.6 billion from an estimated $1.8 billion in 2004.

CDMA handset market in the country will also touch $3.5 billion in 2007 as compared to an estimated $1.6 billion at the end of 2004.

In terms of numbers, GSM handset would go up to 63 million in 2007 as against 11.80 million in 2003 and CDMA manufacturers would have sold 25 million handsets compared to 6 million in 2003.

Mohindroo said the size of the grey market was also expected to shrink significantly to only 20 per cent of the total handset market as a result of duty rationalisation. The share of the grey market was as high as 90 per cent in the total number of handsets sold till 2003.

"The industry has taken a hit of over Rs 20 crore to fulfil the promise of passing the benefit to the consumer, made to the finance minister while demanding lower duty structure," Mohindroo said.