Tech

Consumer electronics prices rise after the festive season


NEW DELHI : The rupee’s continued weakness against the dollar should trigger another rally by consumer electronics manufacturers after the end of holiday sales.

The rupee has fallen nearly 9% against the dollar so far this fiscal to hit a new all-time low of 82.32 on Friday.

Analysts say while the ongoing carnival sales are seeing attractive deals on electronic items, prices could rise significantly after the sales.

“The depreciation of the rupee will certainly have an impact on prices,” said Navkendar Singh, vice president of equipment research at IDC India, South Asia and ANZ. Singh added, but will have to make price corrections eventually.

“We expect (smartphone) prices to increase by 5-7% after the festive season ends, such as in November or December, due to an increase in exchange rates. All new phone models, including 5G models, will increase in price, said Prachir Singh, senior research analyst at Counterpoint Research.

Sanyam Chaurasia, technology markets analyst at research firm Canalys, said suppliers cannot bear the additional pressure of a weak rupee and will have to pass it on to consumers. “Foreign currency has been an issue for companies over the past 18-20 months and” if this continues, we can expect another spike in (price of) Mr. Chaurasia. equipment in the coming months”.

Smartphone manufacturers in India are facing currency fluctuations as they still assemble phones from sold-out kits (SKDs) instead of manufacturing the whole thing. As a result, companies import parts such as displays and integrated circuits in a partially disassembled state to create the final product. A weak rupee will increase the cost of such parts and also the cost of finished products.

“Nearly SKD between 97-98% for most smartphone vendors. If you import, you have to pay extra foreign exchange. A sharp fall in the dollar and rupee will have more impact on suppliers,” he said.

Consumer electronics manufacturers are very worried. Arjun Bajaj, chief executive officer of Daiwa, a homegrown TV brand, said: “The depreciation of the rupee is the biggest challenge at the moment, leading to reduced margins and increased working capital. . said talks have begun in the industry about suppliers raising raw material prices. He added that the price revision will be decided next month.

Similarly, Prashanth Mani, managing director of Motorola Mobility India, said profits from lower component prices, especially semiconductors, were offset by a weak rupee.

“Costs (input) are going down but the exchange rate is going up, so it’s like nullifying itself. Say, you’re down 5-10%, but the exchange rate has gone up 12% in the last six months, so that’s the challenge,” he said.

Mani said that companies are keeping prices on existing inventory but will be forced to pass on higher costs to consumers for new inventory.

abhijit.ahaskar@livemint.com

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