Cos on route to crack Rs 2,000 barrier for colour handsets

The swelling Indian mobile user base can hope to see much more action in 2007, with the year likely to ring in sub-Rs 2,000 colour handsets, sub-Rs 1,000 monochrome handsets, a possible 3G rollout towards the end, and much more in value-added services.

While Thaiwan, China and Korea have bagged deals to produce low-cost handsets for India, the department of telecom is expecting fresh investments worth $2 billion in telecom manufacturing next year, in addition to this year’s commitment of $1.5 billion.

Says LG GSM division head HS Bhatia, “I believe that the sub-Rs 2,000 colour handset would be possible by mid-2007. Companies are already working on cracking that barrier.” Year 2007 will also see PSU telecom operator BSNL launch sub-Rs 1,000 monochrome handset. The company is currently in talks with Taiwanese and Chinese handset manufacturers for the sub-Rs 1,000 handset. BSNL has begun preliminary talks with Taiwan’s Compal and China’s TCL Communication Technology (TCT).

Companies like Texas Instruments have developed a single chip platform for handset companies to launch the sub-Rs 1,000 handset and has tested it with Nokia and Motorola products. Indian Cellular Association chairman Pankaj Mohindroo says, “The sub-Rs 1,000 monochrome handset is possible next year but I see Rs 1,200 emerge as the price point most handset companies would have products available at.”

Motorola launched its Motofone, priced at Rs 1,600, last month to establish supremacy in the Rs 14,400 crore entry-level handset market in India. Market leader Nokia’s entry-level handsets start at a price point of Rs 2,000.

Competition in the entry-level handsets has already led companies like LG to ink contract manufacturing deals with Chinese and Taiwanese OEMs like Arima for making cheaper handsets for the Indian market. Reliance has also inked a deal with Korean manufacturers Rose Telecom and Kedcom for supplying handsets priced at $30. These handsets are slated to hit the Indian market in Q1, 2007.

Domestic manufacturing has already seen leading handset companies and OEMs set up base in India. “While investments worth $1.5 billion were committed this year in telecom manufacturing, we expect a further commitment of $2 billion worth of investments in 2007,” a department of telecom (DoT) official said. In the higher-end segment, data-centric converged handset prices are expected to come down from Rs 25,000-35,000 currently to Rs 15,000 next year, Mr Mohindroo said.