January 9, 2017 -
In an effort to more quickly move towards digital cashless economy, the Indian government is calling on local smartphone vendors to develop sub-Rs 2,000 (US$29.36) smartphones with capabilities to “scan for Aadhaar-based financial transactions” and eventually perform digital payments, according to a report by BGR India.
The government has singled out Indian smartphone vendors like Micromax, Lava, Intex and Karbonn to develop biometric smartphones that are more affordable for people living in rural and remote areas of the country.
“The government’s aim is to allow financial transactions from anywhere, devices which should also have the ability of scanning for Aadhaar-based financial transactions in the future,” said a senior industry executives aware of the meeting who asked not to be named.
Though the government intends to bring the majority of the mass population onboard to the digital economy, it does not have any plans to subsidize the cost of smartphones. Rather, it has asked the smartphone vendors to devise their own solutions to reducing the prices.
The government intends to roll out 20 to 25 million units of these so-called ultra low-cost smartphones.
The plan to bring the price of the biometric smartphones under Rs 2,000 will be a formidable, if not impossible, challenge.
Currently, the least expensive smartphone with a fingerprint scanner, Intex Cloud Scan FP, is priced around Rs 3,700.
“At this point it is not feasible for brands to make sub $30 phone without incurring losses,” said Parv Sharma from Counterpoint Research. “As consumer will not buy phones for transactions purpose only, the expectation from smartphones are high.
“Massive shift in India is happening from feature phones to smartphones but that shift brings with itself a level of expectation- expectation of consuming content, expectation of watching videos and listening to music for longer time and hence need for better hardware features. To accommodate these features, Industry has reached a certain level of price point which is currently $50-$60.”
To make matters worse, the Indian smartphone vendors are continuing to lose market share to Chinese mobile device vendors like Xiaomi and Lenovo-Motorola.
A recent IDC report found that China-based smartphone vendors, who drive sales primarily from the online marketplaces, accounted for more than 40 percent market share in the top 30 cities during the Diwali festival in October.
It is highly unlikely that India’s smartphone vendors will be willing to follow through on the government’s sub-Rs 2,000 smartphone plans.
The government has yet to inform Chinese companies, which commands the largest budget smartphone market segment in the country, about their ambitious plan.
Google CEO Sundar Pichai recently said that the ideal price point for smartphones in the Indian market is $30 (roughly Rs 2,000), adding that the company was willing to make cheaper smartphones for Indian consumers.
Previously reported, IDFC Bank launched an app called Aadhaar Pay that is designed to help the millions of Indian citizens without a smartphone to make digital purchases using only their fingerprint.