The lockdown due to the COVID-19 pandemic has led to production loss of an estimated over Rs 15,000 crore for the Indian handset manufacturing industry.

Smartphone players in India left in the lurch as govt bars sales till May 3Image for representation
Atom Coronavirus Monday, April 20, 2020 - 12:06

Smartphone manufacturers who were taking small steps to adjust to the new normal were left in the lurch on Sunday after the government prohibited e-commerce platforms to sell non-essential items from April 20.

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

The company told IANS that bearing in mind the current order from the Ministry of Home Affairs (MHA), they are further evaluating the situation.

"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 best interests of the people," informed a company spokesperson.

The Centre allowed e-commerce companies and the vehicles used by operators of these units to supply only essential goods subject to "necessary permission" during the lockdown period. The supply of non-essential goods by e-commerce companies will remain prohibited during the 19-day lockdown ending May 3.

Manu Jain, Global Vice President, Xiaomi and Managing Director, Xiaomi India, tweeted that they have received an update from the MHA suspending e-commerce for non-essential items, "affecting our decision about operating from tomorrow".

"We are studying this, and will update you soon. We will, of course, follow all govt. guidelines," Jain said. The company had planned to resume sales on its own from April 20.

The April 15 MHA guidelines had lifted restrictions from e-commerce majors to sell mobile phones and electronic items, including refrigerators, televisions, air conditioners, coolers along with stationery items.

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

"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," Pathak told IANS.

"Phones should be among essential items as a lot happen though them," like digital payments, online ordering, connectivity and more, he added.

The smartphone production in India was set to decrease by nearly 30% for the month of March. With the lockdown and new guidelines set to gobble up entire April, the writing is on the wall.

"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," said Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR.

Arvind Singhal who is CMD 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.

"It can serve the customers' need, 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," Singhal told IANS.

While the lockdown due to the COVID-19 pandemic has led to production loss of an estimated over Rs 15,000 crore for the Indian handset manufacturing industry, there will be no sharp decline in demand for mobile phones in a post-lockdown scenario, predicts industry body India Cellular and Electronics Association (ICEA).

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, said Pankaj Mohindroo, Chairman, ICEA.

However, revenues of smartphone makers will continue to take a hit as the government on Sunday decided not to open e-commerce channels for the sales of non-essential items like mobile phones from Monday as earlier announced.

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

"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," Mohindroo told IANS in an interaction over phone.

"People realise the great value of it now. So we do not see demand going down too much," he said.

The demand, ICEA predicts, will stay healthy for entry level and premium phones.

"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," Mohindroo said.

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