Maker of world’s cheapest smartphone seeks $7.5 billion from Indian premier

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Having stunned the world earlier this year by announcing the world’s cheapest smartphone, it now looks like the makers of the phone may have hit a major roadblock.

Ringing bells, which had priced its Freedom 251 smartphone at $4, has asked the Indian government for $7.5 billion as it claims to be losing around $2.5 to $4 on each handset.

CEO Mohit Goel has written to the prime minister’s office seeking $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.

Freedom 251, where the number stands for its price INR251, 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.

However, four months after its launch, the company has only managed to prepare 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 $17.49 to make the phone. While they say they can recover $10.37 to $11.85 per handset from app developers, the company will still lose between $2.67 and $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.

The company is mired in controversy with some claiming their prototypes were reportedly made by another Indian company.

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.

Furthermore, the company has no manufacturing facilities in India. It claims the phones are only assembled there.