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Handset Makers Ask Govt To Allow Business In Demonetized Currencies

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Mumbai: Hit hard by nearly 50 percent revenue drop, handset makers have requested the government to allow them accept demonetized INR 500 and INR 1.000 notes from customers for a month. In a proposal sent to the telecom, IT and finance ministries, handset makers have reportedly said that the decision to ban INR 500 and INR 1000 notes has adversely impacted their business costing nearly INR 175-200 crore loss. (Click here to read the report)

In a letter to the government authorities, Indian Cellular Association, the apex body of handset makers in the country, has suggested to validate the purchase against valid Aadhaar cards or voter cards and keep a track on the transaction via IMEI (International Mobile Equipment Identity) number, to avoid misuse.

“This will also provide a trigger for further purchase of smartphones and feature phones to transition to digital payment platforms. In turn, this will ease the pressure on cash transactions,” the Indian Cellular Association said in a letter to Finance Minister Arun Jaitley late Friday evening.

Mobile handset sales have crashed 40-50 percent, primarily through brick and mortar channel, which contributes to more than 85 percent of the industry’s turnover. The association argued that sales will fall further in the coming days as consumers will conserve cash for the sowing season essentials such as labour, seeds and fertilizer.

“The daily collection of our trade and industry, which should be Rs 350-400 crore, is down by 50 percent. The cash flow has got affected and it is having a domino effect on the distribution trade and now manufacturing,” the association added.

Companies are closely looking at the market condition and some like Micromax and Intex said earlier this week that if liquidity crunch continues, they would have to consider lowering local production to avoid inventory pile ups. The government recently allowed older Rs 500 notes to be used for prepaid mobile phone recharges, up to Rs 500 per user, till December 15.

The Brick and Mortar has been facing the heat of the currency demonetization as it has affected all the cash transactions. Similarly, offline channel partners are also facing the situations where they are forced by customers to accept the old currencies. To avoid the situation of confrontation wth buyers, many offline partners are giving facilities such as credit, online transfer and check payment to buyers.

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