Indian rupee fall to lift smartphone prices by up to 10 percent

The fall in the rupee against the dollar will raise low-end smartphone prices by 5 to 10 percent, affecting entry to mid level smartphone makers, but high-end phone prices likely to remain unaffected.
Written by Ellyne Phneah, Contributor

The rupee's slide against the dollar will push prices of low-cost smartphone even higher by 5-10 percent, while prices of high-end ones are likely to remain unaffected.

According to The Economic Times on Tuesday, citing dealers, the entry level and mid level smartphone makers are the worst affected because competition in the top end and low cost feature phones is too intense.

The 16 percent fall in rupee since May 1, 2013, has affected mainly companies such as Karbonn, Maxx Mobile, Lava International, Micromax who buy handset parts in dollars from China and assemble them in India. The four make up about 18 percent of India's market.

Analysts also said these companies have already raised prices by 10 to 12 percent and a further increase of 5 to 10 percent is anticipated.

SN Rai, Lava International's co-founder and director, said the company will increase prices of feature phones and smartphones by at least 10 percent to protect their margins against the depreciating rupee as the company's margins have been affected by 10 to 15 percent already.

Karbonn Mobiles also said it will raise prices by 5 to 10 percent within the week across its handset portfolio. "We are carefully monitoring the situation," Deepak Mehrotra, CEO at Micromax said, adding the company will raise device prices if the rupee falls any further from current levels.

Top-end smartphones prices unaffected

However, prices of high-end phones, such as Apple's iPhone or Blackberry's 10 platform phones, remain unaffected.

A person familiar with Apple's company internal operations told the Indian publication the Cupertino-based firm only prices its products once. Apple at the time of pricing its device factors in a calculated call on foreign exchange, import duties when putting a converted dollar price on its products for overseas markets, the person said. 

A Blackberry spokesperson also said the company launched new phones in the last few months when the rupee was already moving, which implied the company would have taken a view on the rupee impact on these devices while pricing.

The more sophisticated companies also found ways to mask higher prices, the dealers noted. New phones come in at higher price tags while the drop in older technology is not as steep as its dollar counterpart, while many companies have started cashback or exchange policies which make a price hike or drop hard to tell.

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