Mobile phone prices likely to increase by 10% after Diwali

Following the Diwali festivities, major Android smartphone manufacturers are likely to increase mobile phone prices by up to 10%. This surprising turn comes at a time when sales in the market are declining, yet prices are poised to rise. According to a report by The Hindu, mainstream mobile retailers are witnessing a 25% to 35% decline in the number of customers and sales in the value-oriented category.

As per estimates by the All India Mobile Retailers Association (AIMRA), sales volumes could see a massive decline of around 50% after mid-November, and this situation may persist for a long time. The retail body stated that due to a decline in demand and a severe shortage of components, top smartphone brands have reduced their production schedules by 30%.

The festive period from Navratri to Diwali is extremely important for Indian mobile retailers, as stores are typically crowded with customers during this time. However, retailers are facing a sluggish market this year. Sales of mass-market devices have declined, and costs have risen due to a global shortage of memory chips.

The most significant impact has been felt in the smartphone segment priced below ₹20,000, which traditionally drove the highest sales. According to retailers, this segment has stagnated as leading brands have not launched any suitable 5G handsets. The decline in the sub-₹20,000 segment is attributed to a historic rise in the prices of entry-level models, the depreciation of the Rupee, and a decrease in the purchasing power of rural consumers.

Major Original Equipment Manufacturers (OEMs) have indicated that in the future, the price of entry-level 5G phones will start at only ₹25,000, which may deprive budget-conscious consumers of this technology. As device prices continue to rise, financing has now become a primary driver of sales. 80% of smartphone purchases are made through EMI financing.

Retailers have requested smartphone brands and NBFC partners to introduce long-term and zero-down-payment schemes to sustain demand and increase the sale of expensive devices priced above ₹75,000.

Kailash Lakhani, Founder Chairman and President of AIMRA, stated, "This increase in consumer prices is due to aggressive tightening of the global memory chip supply by chip manufacturers." He has urged the World Trade Organization (WTO) and the commerce and industry ministers of major global economies to immediately establish a multilateral regulatory watchdog to prevent artificial price manipulation. He warned that if immediate intervention is not made, rising prices will permanently break the mobile replacement cycle, forcing consumers to use their phones for many years.