Analysts reportedly believe that prices of consumer electronics could see a dramatic rise in India after its festive season sales, which are currently running across the country with several attractive deals, come to an end.
As per reports, the analysts’ projections are based on weakening of rupee against the dollar. So far in this fiscal year, the rupee recorded a 9% slump against the US dollar, hitting an all-time low of 82.32 last weekend.
Navkendar Singh, Associate VP of Devices Research, IDC India, South Asia, and ANZ, stated that a weak rupee will certainly affect prices, and although vendors cannot afford further impact on the already-low demand in the festive period, they will have to accept price corrections eventually.
Singh noted that the price increase can be expected in November.
Meanwhile, Prachir Singh, Senior Research Analyst, Counterpoint Research, stated that the firm is expecting a rise of 5% to 7% in smartphone prices as soon as the festive season ends, around November or December, given the increase in the exchange rate.
Sanyam Chaurasia, Technology Market Analyst, Canalys, stated that vendors cannot bear the pressure of a weakening rupee anymore and will have to pass it on to the consumers, adding that foreign currency has been a major issue for enterprises over the past 18 to 20 months.
Smartphone makers in India are facing currency fluctuations while assembling phones with semi-knocked down (SKD) kits rather than full manufacturing, meaning that they are importing parts in a partially disassembled state to make the final product.
A weak currency will lead to higher costs for these parts, as well as for the final product.
Arjun Bajaj, CEO of Daiwa, local TV brand, stated that the decline in the rupee is currently the biggest challenge in the industry, which has led to lower margins and higher working capital.
Bajaj further stated that talks about suppliers increasing raw materials prices have already begun, and that price revisions will be taken up next month.
Prashanth Mani, MD of Motorola Mobility India, stated that the profit from cheaper component prices has been impacted due to the decline in the rupee, explaining that although income costs are decreasing, the high exchange rate is countering its effect.
Source credit: https://www.livemint.com/technology/tech-news/consumer-electronics-prices-set-to-rise-after-festive-season-11665332404155.html