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  1. Demonetisation effect: Budget smartphones worst hit, as overall sales dropped by 90 percent at the start

Demonetisation effect: Budget smartphones worst hit, as overall sales dropped by 90 percent at the start

PM Narendra Modi-led government's move to demonetise high-value currency and the eventual cash crisis has pulled down sales of feature phones and budget smartphones.

By: | Published: December 7, 2016 5:14 PM
smartphones, demonetisation, smartphones demonetisation, demonetisation effect, demonetisation impact, smartphones sales, demonetisation sales, sales impact, cash, money, smartphones cash, smartphones under 10000, budget smartphones, cheap smartphones In India, a large portion of the buyers still uses cash to buy smartphones, especially the ones which fall under the Rs 10,000 bracket. The initial hit to such devices was as high as 90 percent. (Reuters)

PM Narendra Modi-led government’s move to demonetise high-value currency and the eventual cash crisis has pulled down sales of feature phones and budget smartphones. In India, a large portion of the buyers still uses cash to buy phones, especially the ones which fall under the Rs 10,000 bracket. According to an Indian Express Online report, the initial hit to such devices was as high as 90 percent. In an interview with IE, Director of Inter Technologies, Keshav Bansal said that the initial week after demonstration saw a dip of 90 percent in smartphone sales. However, Bansal added that the market has recovered a bit (as it will take some time to totally recover) and the fall right now is around 60 to 70 percent. He said that he does not see the recovery happening for a few months and hence it will show in the quarterly reports of sales figures. He told that the worst hit were phones which cost in the Rs 4,000 to Rs 6,000 range, as they are purchased using cash mainly, IE reported.

A phone retailer from Mumbai informed IE about the same regarding the sales drop and the meagre recovery. He too said that most of the cash-based sales are in the Rs 10,000 or under segment and has therefore been worst affected due to demonetisation. He added that consumers, though still like to pay cash, are now realising other methods of payments including PayTm and the like which has led so some recovery. He said that people who buy budget phones have low-paying jobs, who either do not have bank accounts or do not know how to use technology to use other means. As of now, only 10 percent sales are via cash payments, he told IE.

Another unnamed source from a leading phone brand informed IE that the online sales have affected the brand by 20 to 25 percent as a large portion of the orders were through cash-on-delivery. Yet, he said that the industry was affected worse than retail chains. He added that there is generally a slump in smartphone sales after Diwali, and it is difficult to figure out the exclusivity of the reason for the drop. He said it would be wrong to say that the smartphone market is a collapse as he believes the situation will improve, though not sure how much. Bansal also told that since digital money is being penetrated more into the country due to demonetisation it will help his brand too. Intex even has its own mobile wallet called the Intex mRUPEE as a tie0up with Tata mRUPEE, IE reported.

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