Government asks domestic mobile makers to make smartphones within Rs 2000

In a recent announcement, the central government has asked local mobile phone makers to develop smartphones that will cost less than Rs. 2000, to enable cashless transaction. This is because the government has realised that the drive towards cashless economy will not succeed until and unless affordable mobiles and other devices reach out to rural India.

In a recent meeting held by Niti Ayog, the government has asked India bound handset makers like Intex, Lava and Micromax to build economical mobile devices. Such low cost smartphones can help digital transaction reach out to the masses more smoothly and economically. However, larger players like Apple and Samsung did not make it to the meeting.

One of the three people who were aware of the discussion said that the government's aim to enable digital transaction is growing exponentially now. However, at the same time the government realised that there are not much low-cost smartphones available in the market right now. Two of the attendees even said the Indian government is asking domestic handset makers to bring in 20-25 million handsets into the market. On one hand it has ruled out government subsidy and on the other, is asking companies to find solutions that can bring low-cost smartphones, which are capable of allowing online transactions.

Industry insiders said that key challenges like keeping the cost of the phone low while adding features like finger print sensors, scanners and high quality processors needs to be kept in mind. Presently, 3G smartphones are available for a price of around Rs. 2,500.
Another challenge the mobile makers will face is the total volume of devices planned to be sold. Such high volumes will require huge investments and an advance inventory pile-up.

Central government has been pushing towards cashless transaction after it demonetised Rd. 500 and Rs. 1000 notes in November, 2016. Mobile payment method is said to be the key shift towards a digital economy.