India govt plan to build sub-$100 phones not feasible

Latest attempt by the government to sway votes in its favor ahead of the 2014 elections is an ambitious plan to say the least. It should instead look at building a facility to fabricate components for Indian phone manufacturers.
Written by Nitin Puri, Contributor

The Indian government has expressed interest in developing sub-$100 smartphones, touting the "Made in India" seal.

Indian government should instead build a facility to fabricate and manufacture components required by local mobile manufacturers.

To sweeten the deal, and lure votes ahead of the country's 2014 elections, its plan also calls for women who have worked for 100 days or more in 2012 under a rural employment scheme, to receive the smartphone for free. The limit will be one female member per household, according to a report by The Times of India.

Considering the mixed response from the Aakash series of tablets, one must question if the Indian government is ready to embark on another new project? Or is this simply a quick fix to appeal to the voting population and secure votes? Well, in India, almost anything goes, and that's not to say the Indian government won't stop at anything to receive your vote.

It should be noted that the average price for smartphones in India is around US$130, and one key reason why barely 5 percent of the population has upgraded to a fully functional smartphone, despite the country's mobile penetration rate of around 70 percent. 

Even if the cost for the average Indian consumer is subsidized and reduced, there are still many hurdles to overcome such as developing a broadband mobile ecosystem to undertake mass mobile content, and applications development in regional languages.

Personally, I feel this is completely a waste of time for the Indian government. In addition to potentially wasting taxpayer's money on a futile project, current Indian mobile phone manufacturers such as Karbonn, Micromax, and Onida, have already made their impact in the domestic mobile market. Furthermore, low-end devices available now are smartphones with equally good capabilities and qualities as high-end offerings such as those from Apple or BlackBerry.

If anything, the Indian government should perhaps enter an agreement with one or all of the Indian mobile manufacturers to develop a smartphone for the Indian masses. Domestic device manufacturers might be interested in this scheme as it could potentially result in reduced tariffs for importing parts, as most components still originate from China.

Perhaps the government should take a different route and set up a facility to fabricate and manufacture the components required for Indian mobile manufacturers, in order for the "Made in India" seal to really mean it actially is Made in India. Right now, most of it is in fact Made in China. It's simply assembled in India, and as a result, Indian mobile manufacturers are paying the price for importing these components, compared to acquiring them locally within India.

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