Weak rupee to ring in costly cellphones for consumers

Mobile phones are likely to get dearer as handset manufacturers are struggling against rising costs of components that are largely imported, reports Ruchi Hajela.

A fast depreciating rupee is leaving a jarring note on the mobile handset industry. Mobile phones are likely to get dearer as handset manufacturers are struggling against rising costs of components that are largely imported.

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Although the top five manufacturers Nokia, Samsung, LG, Sony Ericsson and Motorola have their handset manufacturing facilities in India, most of the components are imported. “Rupee depreciation has had a grievous impact on margins, manufacturers were expecting the value to go up to a maximum of Rs 43-44 but the last drop of close to 49 is a big shock to the industry,” said Pankaj Mohindroo, national president, Indian Cellular Association.

A falling rupee also means costlier imports. Not only does it impact mobile handset prices, but also leads to a price hike by some IT hardware manufacturers (see table).

India is amongst the fastest growing mobile markets in the world with over 300 million mobile users and close to 9 million adding every month. Sales in India are important as saturated markets like the US and Europe have been hit hard by the global meltdown.