While multinational phone companies are worried over the Reserve Bank of India’s move to ban zero per cent equated monthly instalment (EMI) schemes, makers of cheaper local brands are hoping that this would increase their sales as consumers find it difficult to buy imported high-end phones.
“The very purpose of selling handsets on EMI schemes is to make them affordable and I believe this would impact high-end mobile handset manufacturers. Now with buyers making a one-time payment instead of EMIs, companies like ours would benefit,” Krishna Singh, Chief Operating Officer, Maxx Mobile, told Business Line .
foreign brands
The EMI schemes were helping foreign brands such as Apple and Samsung to drive sales of their high-end smartphones. According to analysts, these schemes were perceived to be user-friendly as they made high-end devices more affordable to a larger user base in India. But the RBI order could dampen sales in the festival season.
S. N. Rai, Co-founder and Director, Lava Mobiles, said, “The RBI order will impact the high-end smartphone makers, which were striving against each other only because of EMI schemes. We had only 2-3 models with such schemes, so we are not worried.”
No bundling
Foreign players had adopted the EMI route because Indian telecom companies have refused to bundle handsets with connections. In countries such as the US, mobile operators subsidise smartphones along with a connection. “Let's wait and watch as to what is the extent of its impact on the sales numbers for these top end brands,” Manasi Yadav, Senior Market Analyst, Mobile Phones and Tablets at IDC India, said.
Blackberry India’s spokesperson, however, said that it wasn’t too worried. “Our EMI schemes are zero interest with no processing fee, ensuring complete transparency with customers who know exactly what they are paying for our smartphones with no hidden costs. This move is likely to make consumers more aware while making festival season purchases,” the spokesperson said.
According to Faisal Kawoosa, Lead Analyst - Telecoms Practice at CyberMedia Research the RBI’s decision will definitely make it harder for the phone companies to send out ‘irresistible’ messages out to the aspirational potential market.
“On the sales side, I see a little bit of impact till the consumers get used to this new financial lingo. After all, there isn’t much change on the ground. You are still paying more than what you borrow when purchasing a gadget on EMIs,” he said.