BUSINESS

Mobile handset prices reduced

NEW DELHI, MARCH 3. In an attempt to clear the confusion on cell phone prices following the duty cuts announced recently by the Union Government, the mobile handset industry today announced minimum retail prices of 40 phone models manufactured by seven multinationals. While the Government had announced the duty cuts, consumers were a harassed lot as shop owners quoted different rates for the same model.

The reduction ranges between 8 and 20 per cent for entry level phones whose prices range from Rs. 3,000 to Rs. 6,000; 6.5 and 17 per cent for mid-featured phones costing Rs. 7,500-Rs. 8,300; and, 5 and 21 per cent for fashion life styles which cost between Rs. 15,000 and Rs. 25,000.

The prices are likely to be slightly higher in Tamil Nadu and Karnataka as these States have maintained the sales tax at higher levels than other States such as Andhra Pradesh, Kerala, Delhi, Orissa and West Bengal.

"In spite of large stocks in the pipeline which were cleared under old duty rates, the industry has passed on the benefits immediately to fulfil its commitment to the Government. The members have taken a hit of over Rs. 20 crores to fulfil their promise,'' claimed the Indian Cellular Association's (ICA) national Secretary, Gopal Jiwarajka.

The reduction in handset prices has come at a time when the cellular phone service providers such as Bharti and Reliance have hiked call rate charges on the pretext that the outgo on account of inter-company settlement rates has increased. The cellular handset makers were able to reduce the prices because the Centre abolished four percent special additional duty on imports and halved the basic customs duty on cell phones to 5 per cent.

A portion of the reduction is due to reduction of sales tax in states. A number of States have reduced the sales tax to 4 per cent from the earlier band of 12 to 20 per cent. While appreciating the initiative taken by the States led by West Bengal, the ICA President, Pankaj Mohindroo, appealed to Tamil Nadu, Karnataka, Bihar, Jharkhand and several North East States to follow suit. He also appealed to Punjab Gujarat and Maharashtra to abolish octroi. The higher sales tax and octori, he said, ``was fuelling the grey market''.

Mr. Mohindroo revealed that the industry was working on a concept paper aimed at encouraging the setting up of handset manufacturing base in the country. So far, none of the companies including Nokia, Motorola, Siemens, Ericsson and Alcatel manufactures the phones in the country. ``We will prepare the report in eight weeks. It will contain the industry's wish list for encouraging the manufacturing of phones in the industry.''