The Indian Cellular Association has requested the Government to allow the use of demonetized Rs 500 and Rs 1000 notes for buying mobile phones. The authority has claimed that the mobile handset sales have brought down by 50 percent due to the cash crisis after the demonetization.
The association has asked Finance Minister, Mr. Arun Jaitley to allow the use of old currency notes of Rs 500 and Rs 1000. The association said in a letter that, the mobile handset sales have packed up in the retail store which accounts more than 80 percent of the turnover and the industry has witnessing 50 percent downfall in the daily collection which remains usually around Rs 350-400 crores.
The association further said that the cash flow of the trade and industry have got influenced and it is creating a domino’s effect on the distribution business as well as manufacturing industry. IDC has published a report recently which revealed that the constant cash crunch will pull down the shipments of feature phones by around 24.6 percent, while the smartphones will witness declined sales by 17.5 percent during the quarter than the prior quarter. To recall, the feature phone and smartphone shipment in the July-September quarter accounted for 39.9 and 32.3 million units respectively.
The slowdown has affected the PC and mobile device demand, not just in retail but online channels as well. The cash-on-delivery mode of payment is the most preferred mode among Indian consumers and it contributes a large portion of the sales. ICA has demanded the government to permit the use of old currency notes of Rs 500 and Rs 1000 for the purchase of mobile phones against a valid identity proof for a period of 30 days.
The association said that the mobile phones that are purchased alongside the valid ID card could be tracked using IMEI number. The government is concentrating on India as a digital payment economy and the mobile phone industry is an important part of it. At present, the government has permitted the use of old currency notes for the payment of some essential services such as electricity bills, prepaid mobile recharges, water bills, highway toll.
Industry experts have estimated that the sales of latest mobiles and upcoming mobiles in India might continue to come down till the cash crunch remains. However, it is expected to stimulate to normal run-rate by the second half of the next quarter. Recently, the Cellular Operators Association (COAI) has requested the government to allow using the old currency notes of Rs 500 for pre-paid mobile recharges to help consumers to continue using the mobile services without trouble. As per the industry estimates, the prepaid mobile services like recharges and top-ups have fallen by 30-50 percent as the consumers are saving the cash for essential payments. The old Rs 500 notes will be considered as a legal tender for prepaid mobile services from the midnight of November 24 and up to December 15, the finance ministry said.
Rajan Mathews, Director at COAI said that the consumer interest is taken into consideration and hence the citizens can now use the old currency notes for making recharge of prepaid mobile services.
