A Reliance source told The Asian Age that the company is not going to have the proposed manufacturing facility in Gujarat as the prices of handsets have reduced dramatically. The company negotiated the prices very aggressively with its vendors. Reliance has recently reduced the handset prices in the high end segment, bringing the price down by nearly 50 per cent.
At present, handsets attract only five per cent as import duty. This will come down to zero next year as India is a signatory to the WTO agreement.
“The prices at which we buy the handsets cannot be matched even by a domestic producer,” he said. Reliance is now famous for its negotiation skills in the handset market.
The competitors feel that the huge volume order enables Reliance to price its handsets lower than any other operator.
The company earlier planned to set up a joint venture for manufacturing handsets in Bhuj, Gujarat. The company had earmarked Rs 60 crores as an initial investment for this project. Sources said that the plan was a part of a backward integration initiative for RIC’s CDMA roll out.
This project was to make the handsets affordable. During that time, the company was in the process of finalising a mega deal to import six million CDMA handsets for its WLL initiative.
The market for handsets, both GSM and CDMA put together, is 26-27 million in India for the year 2004. According to the Indian Cellular Association report predictions, the industry will grow by 35 per cent year-on-year basis till 2010.
The factors, which are attracting the handset manufacturing industry are local demand and proximity to demand centres, labour arbitrage, electronic manufacturing base and the government policy, the report said. China, Eastern Europe, Mexico, Brazil, South Korea are the key places at present.
Two manufacturers have already shown their interest in setting up a production base in India. One of them is LG. Samsung, one of the world’s largest manufacturers of mobile phones, is also considering the possibility of setting up a manufacturing base in India. The company will take a final decision by the end of this year. |
