The maker of the world’s cheapest phone has asked the Indian government for $7.5 billion.
Noida-based Ringing Bells, which stunned the world earlier this year when it announced the launch of a $4 smartphone called Freedom 251, now says it is losing between $2.5 and $4 on each handset.
The company has, hence, asked Indian prime minister Narendra Modi for Rs50,000 crore ($7.5 billion), so that it can fulfill its promise of providing inexpensive smartphones to millions of Indians.
“In order to digitally empower every Indian, if I can get government support under the Digital India programme, I can ensure timely delivery of ‘Freedom 251’ phone to all citizens at the same price,” Ringing Bells CEO Mohit Goel said on July 6. Goel has written to the prime minister’s office (PMO) seeking funds.
Freedom 251—where the number stands for its price, Rs251—was launched by Ringing Bells in February. Within days of its launch, the company received an astounding 73 million bookings—around the same number of Apple phones sold in India every quarter. The company had promised to deliver 2.5 million phones by July.
The handset comes with an Android Lollipop 5.1 operating system and is powered by a 1.3 GHz quad-core processor. It also has 8GB storage and a 3.2-megapixel camera.
Now, four months after its launch, Ringing Bells has only managed to ready 200,000 phones for delivery. “We may deliver more units if we get help or we may not deliver at all in the upcoming months,” Anmol Goel, the company general manager, told the Indian Express.
According to the promoters, it costs Rs1,180 ($17.49) to make the phone. While they say they can recover Rs700 ($10.37) to Rs800 ($11.85) per handset from app developers, the company will still lose between Rs180 ($2.67) and Rs270 ($4) on each phone.
However, the Indian Express newspaper has described the company’s math as “befuddling.”
“Most industry groups point out: A Freedom 251 device costs minimum of Rs2500 ($37) to make. So Goel’s claim that he is losing only Rs 180-170 per phone is astounding,” the newspaper said.
Neither has the company revealed details of the app developers it has tied up with.
Besides, Ringing Bells has been mired in controversy ever since it announced the $4 phone.
There were accusations that the model was a blatant copy of Apple’s iPhone, including the icons of the built-in apps. Ringing Bells defended itself saying, ”Apple hasn’t copyrighted its designs.” Meanwhile, the company’s registered headquarters was traced to a garment shop in Gandhi Nagar, an East Delhi textile hub.
At the launch in February, the company had displayed prototypes that were reportedly made by another Indian company, with the brand name covered by whitener.
The promoters face other legal hurdles, too. The shadowy nature of the whole project became more apparent when allegations reached the Indian parliament where the opposition called it the “biggest scam of the millennium.”
In fact, the Indian government’s department of industrial promotion and policy—the nodal agency for Modi’s pet project, Make in India—had to publicly deny its involvement in the project after questions were raised over why senior government officials were issuing clarifications on behalf of Ringing Bells.
Meanwhile, in the letter to the PMO, Goel has said the government can give the money to another manufacturer. ”The government can make the phone—under our Freedom brand—from some other vendor. I have no objection to it,” Goel said.
The company has no manufacturing facilities in India; it claims the phones are only assembled here.
On July 07, Ringing Bells launched what it claims to be India’s cheapest LED TV, priced at Rs9,900 for a 31.5-inch model. In all likelihood, the TVs will reach customers earlier than the smartphone, considering the huge shortage of handsets.