New Delhi: Android phones are the most popular smartphones in India, accounting for over 80% of the market share. However, in recent times, many consumers have noticed that the prices of Android phones have been increasing steadily, especially in the budget and mid-range segments. What are the factors behind this trend? Here are some of the possible reasons.
Covid-19 pandemic
The Covid-19 pandemic has disrupted the global supply chain of smartphone components, leading to shortages and delays in production. Many smartphone manufacturers source their parts from China, which was hit hard by the pandemic and lockdowns. The demand for smartphones also surged during the pandemic, as people relied more on them for work, education, entertainment, and communication. This created a mismatch between supply and demand, resulting in higher prices.
Budget 2021
The Union Budget 2021 announced by Finance Minister Nirmala Sitharaman in February also had an impact on the prices of Android phones. The government withdrew some exemptions on the import duty of smartphone parts, such as printed circuit board assembly (PCBA), camera modules, connectors, and back cover. These parts account for about 50% of the cost of a smartphone. The import duty on these parts was increased from zero to 2.5%, making them more expensive for smartphone manufacturers. The government’s aim was to boost local manufacturing and reduce dependence on imports.
5G spectrum auction
Another factor that could affect the prices of Android phones is the upcoming 5G spectrum auction in India. The government is expected to conduct the auction by March 2022 and allocate spectrum bands for 5G services. The telecom operators will have to bid for these bands, which are likely to be expensive. The cost of acquiring spectrum will be passed on to the consumers in the form of higher tariffs and recharge plans. Moreover, the 5G smartphones will also require more advanced chipsets and components, which will increase their production cost and retail price.
Market forces
The Indian smartphone market is one of the most competitive and dynamic markets in the world. The demand for smartphones is high, but so is the competition among various brands and models. Smartphone manufacturers have to constantly innovate and offer new features and specifications to attract and retain customers. This also means that they have to invest more in research and development, marketing, and distribution. These expenses are reflected in the prices of smartphones.
These are some of the possible reasons why Android phones are becoming costlier day by day in India. However, there are also some factors that could bring down the prices in the future, such as economies of scale, technological advancements, government incentives and subsidies, and consumer preferences. The smartphone market is dynamic and unpredictable, and prices may vary depending on various factors. Therefore, consumers should do their research and compare different options before buying a smartphone.
