Cheap Indian smartphone sounds labor rights alarm

Thomson Reuters Foundation, MUMBAI, India

Sat, Jul 02, 2016 - Page 11

The Indian makers of a US$4 smartphone hope its low price will allow millions of poor people to own a mobile phone in a market with only 10 percent penetration.

However, labor rights campaigners worry that the push to churn out cheap handsets and tablets might lead to greater abuse of workers’ rights in India, the world’s fastest-growing smartphone market.

Ringing Bells Pvt Ltd’s Freedom 251 smartphone is to cost 251 rupees (US$3.72) — possibly the cheapest Android smartphone in the world.

On Thursday, CEO Mohit Goel said the first shipment of about 200,000 handsets was due next week.

Ringing Bells pays fair wages to its workers, and its pricier models will help offset the cost of the US$4 smartphone, he added.

“Our vision is to make mobile phones more affordable to the millions of poor Indians who do not own one,” Goel said.

India sold 103 million handsets last year, an increase of 29 percent from the year before.

With only one in 10 Indians owning a mobile phone, there is enormous potential — much of it at the lower end of the market, where dozens of local and foreign brands are vying for customers.

However, the pressure to keep costs low is pushing manufacturers to pay low wages, rely on cheaper contract labor and insist on unpaid overtime, activists say.

“Responsibility of the supply chain and workers lies with brand companies,” said Gopinath Parakuni, secretary-general of Cividep, a workers’ rights campaign group. “Our regulations simply aren’t strong enough to ensure workers in the electronics industry are taken care of.”

While most of the 100-odd mobile phone companies in India largely import from China and Taiwan, companies are increasingly heeding Indian Prime Minister Narendra Modi’s call to “Make in India,” an initiative launched in 2014 to emulate China’s export miracle.

Chinese smartphone maker Xiaomi Corp (小米) rolled out its first locally made smartphones last year from a facility in the southern Indian state of Andhra Pradesh.

However, the "Make in India" drive to boost local manufacturing lacks sufficient checks and balances for millions of workers who face archaic labor laws, low wages, few benefits and little job security in businesses that often flout laws on safety or underage workers, activists say.

Not all efforts to produce cheap electronics have been successful.

In 2008, the Indian government unveiled a US$10 laptop that ended up costing more than US$100, while a US$20 Android tablet sold through a subsidy scheme failed to capture significant market share.

"Companies like to say cheap phones and computers is about digital empowerment and democracy, but we must stop and ask: 'What is the real cost of these cheap devices? Who pays the price?' Cheap is not always good," said Raphel Jose of the Center for Responsible Business in New Delhi.