Customs duty of Rs 500 per imported mobile phone, and weakening rupee values against the dollar have led to a rise in the price of mobile handsets, traders said on Thursday. They said that while the price of an ordinary handset increased by Rs 250 to 500, a highly featured one, like the Nokia E90 rose by Rs 10,000 or more, in the local market.
Recent sales have declined sharply, traders say, citing the abnormal law and order situation and rising inflation as the driving forces behind this fall.
Sales of low-end mobile sets, which were available in the range of Rs 2,500 to Rs 6, 000, have dropped 30-40 per cent, with the recent bombings leading to an even larger fall. In the post-budget scenario, sales declined to 50 percent, they pointed out.
Prior to the budget announcement, mobile phone distributors in the country halted the sale of phones because they anticipated the imposition of a duty of 10 per cent on their import in the budget. "Two days before the budget announcement, markets fell short of mobile handsets, and after the announcement, distributors brought handsets at increased rates in the markets by at least Rs 250 to Rs 500 per ordinary set, they said.
Local distributors of mobile phones have earned million of rupees from their already stocked stuff, the sale of which, they had halted prior to the budget announcement. They added that this led to a huge reduction in sales.
However, some traders said that the imposition of custom duty worth Rs 500 on the import of mobile phones is likely to increase their price by 25 percent. They were also of the opinion that a rising value of the dollar against the rupee was a major factor behind the increase in the price of handsets. However, prices of various mobile phone accessories have not as yet been increased.
Import of mobile phones is almost at a standstill, they pointed out, but their smuggling from China via Dubai and Afghanistan into Pakistan, is on the rise, they said.
The government's move to include the mobile phone in the index of luxury items by imposing custom duty is likely to reduce the sale of handsets even further, they said.