Reasons Behind the Possibility of Discounts on Smartphones

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Consumers need not lose their hearts over having missed the recent mobile phone offers on Amazon and Flipkart as there are many such offers likely to happen. The offers are anticipated to take place in the weeks leading to July 1. Retailers are hoping to sell off old inventories before the implementation of the Good and Service Tax which has the possibility to have a rise in handset prices.

Analysts and sector watchers say retailers are likely to offer price cuts to bring down the level of unsold stocks while some handset brands may offer discounts directly to the end users, via online and offline modes. Counterpoint Research expects up to 10% price cuts on handsets, late June.

“June will be dry in terms of sell throughs (sales to customers,) and if price increase happens in July, discounts may be offered by brands starting mid June till the month end, such that the old stock is cleared before models with increased prices start coming in,” said Navkendar Singh, senior analyst at International Data Corporation, India.

Most of the mobile phones are expected to be increased by 4-5%. The current quoted price is 12% on telephones for cellular networks and parts for their manufacture has been fixed by a council deciding tax rates on all goods and services in India, explains the industry body Indian Cellular Association.

The occurrence of higher prices if passed on to consumers by companies, would be applicable from the following days or weeks considering the GST rates would kick in from July 1.

The associate director at Hong Kong based Counterpoint Research, Tarun Pathak, spelled out feedback from trade channels. He said brands have already started pushing the inventory to distributors. These merchants are not willing to take them to retail due to the uncertainty during the transition phase of the Goods and Service Tax.

Tarun Pathak added that we can expect discounts from June end since the retailers would not want to hold on to stock which may become expensive.

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