Xiaomi, Realme, Oneplus & Other Smartphone Brands Face Rs 15,000 Crore Loss In India

The COVID-19 pandemic and the lockdown imposed to curb the spread of the virus has left many businesses to shut down.

According to reports, the production loss for the Indian smartphone manufacturing industry is estimated to be over Rs 15,000 crore.

Read to find out more…

What is the Fuss About?

According to April 15 Ministry of Home Affairs (MHA) guidelines,  e-commerce majors were allowed to sell mobile phones and electronic items, including refrigerators, televisions, air conditioners, coolers along with stationery items.

The Centre prohibited the e-commerce companies from selling non-essential items on April 19, leaving the smartphone manufacturers high and dry.

The Government has allowed e-commerce companies to sell only essential items and the vehicles used by operators of these units to deliver the same subject to ‘necessary permission’ during the lockdown period. The supply of non-essential goods by e-commerce companies will remain prohibited till May 3. 

Sale of mobile phones is now expected to resume after the end of the lockdown period on May 3.

The smartphone production in India was set to decrease by nearly 30% for the month of March. With the lockdown and new guidelines set this decline is bound to increase in the month of April.

There is however a silver lining to the cloud of production loss of over Rs 15, 000 crore. According to the predictions of an industry body India Cellular and Electronics Association (ICEA), there will be no sharp decline in demand for mobile phones in a post-lockdown scenario. The demand will stay healthy for entry level and premium phones.

However, the revenues of smartphone makers will continue to take a hit.

What is the Industry Experts Take on the Situation?

Tarun Pathak, Associate Director, Counterpoint Research said that this move will create more uncertainty in the market, especially among the suppliers and retailers. 

He told IANS, “We have been hearing some absolute essential sales happened behind the scenes during the lockdown but yes, those will be in hundreds as against potential 11-12 million smartphone sales which happen in a normal month.” 

He also highlighted that smartphones and phones should be among essential items as a lot happens through them, like digital payments, online ordering, connectivity and more.

Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR said, “The COVID-19 pandemic is having a debilitating impact on consumer electronics sales. With both online and offline channels getting hit in April, consumer electronics brands have not been able to meet the usually peak summer demand.” 

Arvind Singhal Chief Managing Director of Technopak, India’s leading management consulting firm, said that e-commerce is an effective solution to practicing social distancing especially while retail stores are closed to minimise the movement of people outside their homes.

He also told IANS, “It can serve the customers’ needs, and this should be enabled without defining the essentiality of goods. Consumption growth needn’t be stopped and can be supported, backed by the capability of e-commerce companies to deliver.”

Pankaj Mohindroo, Chairman, ICEA emphasized that the extension of the lockdown will ‘obviously’ increase the loss for handset manufacturers, but this period has also helped people realise the value of mobile phones, 

Mohindroo told IANS in an interaction over the phone, “These are uncertain times. But it seems that people will make a beeline for smartphones (after the lockdown) because they saw in the lockdown that one could make an enterprise survive by merely having a smartphone. Education also shifted to smartphones. People realise the great value of it now. So we do not see demand going down too much.” 

Mohindroo on the demand of smartphones said, “The entry-level smartphones (under Rs 10,000) will be very well positioned. The feature phones will also have a very good market because people who do not have a mobile phone will now start buying one.”

What do Realme, Xiaomi Have to Say?

Realme was all set to start online sales of its smartphones from April 20. Meanwhile launching the Narzo smartphone series on April 21 through e-commerce platforms, the first launch post 21-day lockdown in the country. 

The Realme spokesperson said, “The decision about the launch of the much-awaited Narzo series and online sales of our other smartphones will be made by tomorrow. People’s health comes first at Realme and we will follow the government’s directives issued in the best interests of the people.” The company said they are further evaluating the situation based on the current order from the MHA.

Xiaomi had planned to resume sales on its own Mi.com from April 20.

Manu Jain, Global Vice President, Xiaomi and Managing Director, Xiaomi India, took to Twitter saying that they have received an update from the MHA suspending e-commerce for non-essential items, ‘affecting our decision about operating from tomorrow’. He added, “We are studying this, and will update you soon. We will, of course, follow all govt. guidelines.”