Best And Cheapest Smartphones at Rs. 500? Their true cost may be Rs 26,000 crore!

Who will use these ultra-low-cost smartphones? The likeliest answer is feature-phone users who primarily use their phones to make calls. The attempt is made to increase smartphone penetration and generate data revenue from this huge untapped user segment. "The smartphone penetration is very low in the Indian market (25%-30%), and we need more internet enabled phones to offer [a] connected experience to [the] masses," says Jaipal Singh, Senior Market Analyst at IDC India.

In August 2017, Reliance Jio introduced JioPhone, a 4G VoLTE-based low-cost feature phone with bundled tariffs. As Jio vacuumed up subscribers, incumbents Airtel, Vodafone, and Idea Cellular are reportedly coming up with Rs 500 smartphones and bundled tariff plans.

On the face of it, this seems too good to be true. And it is. Based on ET analysis, this move will bleed the operators' balance sheet. What's worse is it may not have the intended effect of boosting their data revenues.