Budget smartphones likely to see price rise after November 2022

With the Indian rupee weakening against the US dollar and hitting record lows, smartphones, especially budget handsets, are likely to see a 5-7 per cent increase in prices in the October to December period, reports suggest.

According to a report by ET, which interviewed industry executives and analysts, smartphone brands had largely held off passing down increasing costs to consumers in view of the festive season.

That, however, could change November onwards, especially if the rupee continues in the same direction.

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The publication, citing market tracking company IDC, said the projected increase in prices could push the industry average selling price (ASP) up to a record Rs 20,000 in the October-December period of 2022 from Rs, 17,000 in the April-June period of this year.

"The depreciation is certainly increasing the cost pressures. As brand, we have been well-placed to absorb the impact of USD appreciation for the past few months ... [but] we may need to upward revise the prices if the US monetary policy tightens further and the USD/INR exchange rate continues in this direction," a Xiaomi India spokesperson told the publication.

Sunil Raina, the president of Lava International, echoed the same, telling the publication, "We are paying higher on components that need to be imported for smartphone manufacturing due to a direct impact of the higher exchange rates ... That leaves us with two options - either increase prices or take a hit on profits. For now, we have not passed the increasing costs down to the consumer... but eventually, if the [rupee's] slide doesn't stop, we will have to look at price hikes."

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Given these trends, Prachir Singh, a senior analyst with Counterpoint Research, told the publication that a 5-7 per cent price rise is expected in the budget segment in November.

However, premium smartphones are unlikely to be impacted by the weakening rupee for now. Apple had already hiked the price of its most affordable 5G iPhone in September in view of the sliding rupee, something Samsung had also done last year with regard to its foldable models.

That being said, flagship phones released in the beginning of the year may see a price rise later in 2022 if the rupee continues to fall.