New Delhi, May 23: Mobile handset makers are likely to increase prices by 15-20 per cent to counter the impact of a weakening rupee.
The rupee has weakened about 12 per cent against the dollar since February, hitting an all-time low of 56 today, which has led to companies spending more on the same quantity of imported materials.
As most of the handsets sold in India are imported, companies such as BlackBerry, Samsung and Sony Ericsson are likely to increase prices across models. Moreover, 80 per cent of components ' covers, keymates, chargers, prints and packs, antennas, display panel, battery ' are also imported, impacting manufacturing costs.
"Profitability of handset makers has been falling over the past few quarters. Only 33 per cent of the market are being catered to by locally made products so phone makers are likely to increase prices by 15-20 per cent to pass the dollar appreciation cost to consumers," said Pankaj Mohindroo, president of the Indian Cellular Association, the industry body representing handset makers.
Mobile makers already raised prices around 3-5 per cent in the last quarter to compensate for a weak rupee.
Nokia, which has a manufacturing facility in India, may be able to cushion the impact, said analysts. Nokia not only sources local components but also exports phones, which shield it from the rupee fall.
Meanwhile, stocks of telecom service providers tumbled up to 4.3 per cent on the BSE today.
Bharti Airtel settled 4.29 per cent lower at Rs 281.95. Idea Cellular slipped 3.48 per cent to close at Rs 74.95, while Reliance Communications was down 1.94 per cent to Rs 63.10.