The Rs. 1,000 and Rs. 500 which are two largest denomination in India are discontinued to be circulating as legal tenders. Those both these denominations are replaced with Rs. 2,000 and newer Rs. 500 notes, the small withdrawal limit is now hurting more and more business. The improper implementation has created a lot of confusion in the people’s mind. Now, almost three weeks after the announcement, still many businesses are facing the demonetization effect with a drastic drop in sales. The smartphone sales aren’t any exemption; the smartphone industry is said to have experienced almost 50% drop in sales which translates to Rs. 175-200 crore transactions per day.
Indian Cellular Association (ICA) on behalf of the mobile phone manufacturers requested Government to allow the older Rs. 1,000 and Rs. 500 notes for purchasing the smartphone and feature phones for a month time. The ICA also suggested that the mobile phone sales will give the user an option for digital payments and in future, there will also be a lesser cash transaction. Apart from eradicating black money, the increase in cashless transactions is also one of the factors for demonetization. Even the mobile phone manufacturers also said to collect the Aadhar card number which along with IMEI number can be used to avoid misuse of this exemption.
Though the online smartphone sales had seen a huge growth in the last couple of years, still more than 85% of the sales happen through offline stores. Even the online stores like Flipkart, Amazon, and Snapdeal stopped the Cash on Delivery (COD) transactions in the initial few days after the demonetization announcement. While the Government is yet to the response over the ICA’s letter, the manufacturers might miss their sales numbers for the upcoming holiday season. Recently, Vivo has launched its latest smartphone Vivo V5 in India for Rs. 17,980. Unlike many other Chinese manufacturers, Vivo’s majority sales happen through offline stores. Stay tuned on Phone Radar for further updates about the demonetization effect on the Indian smartphone industry in the coming days!