Headphones

Yesterday, the telecom ministry declined permission for Apple to sell branded refurbished phones in India; an official told Reuters that India does not allow import of used phones. The decision came after the Consumer Electronics and Appliances Manufacturers Association wrote to India’s telecom ministry asking to revoke any permission to Apple

Under the India Hazardous Waste Management, Handling and Transboundary Movement Law 2008 (pdf), India has banned import of used, second-hand and refurbished computer parts and components. However, in India refurbished iPhone 4, 4s, 5, 5s and 6 models accounted for 40% of overall sales for most private refurbished re-sellers in March.

We beleive that not only domestic retailers, but brands themselves should be allowed to import used phones, which could have the following benefits for consumers:

  1. Give consumers a choice of better performance at the same price: Quality of most budget devices are aren’t on par with many mid-ranged and other high-end devices. Allowing re-sale of second-hand refurbished devices will provide an opportunity for consumers to lay their hands on premium devices at a lesser price. Cyber Media Research (CMR) points out that only a little over 0.6 percent of smartphones shipped in India had a 4GB RAM capacity, with the premium (or high-end) segment accounting for just 0.6% of the entire smartphone market in India.
  2. Will help bring prices down: Low-end device manufacturers will feel the pressure of better products at a comparable price, and might bring down prices of devices planned for future production, if premium makers are allowed to sell better quality devices at cheaper prices. CMR says that the average selling price for a smartphone in India dropped from Rs 13,000 in 2013 to Rs 10,700 by the end of 2015. This drop mainly attributed to the entry of Chinese and other low/mid-ranged phone manufacturers
  3. Help improve 4G LTE adoption: The availability of high-end phones equipped with 4G LTE  at cheaper prices will help push 4G network adoption in India. This will create a downward pressure on pricing of 4G handsets, and could help make lower-end 4G handsets cheaper. India recently overtook U.S as the second largest market for smartphones, with more than 220 million users. In addition to this, it will The top operators in  the country have already started rolling out 4G services in different circles. Counterpoint said that 2 out of every 3 smartphones shipped during Q1FY16 in India had LTE, and almost 39% of them had a Qualcomm processor integrated in them.

Therefore, if quality of refurbished phones remain intact in comparison to new ones, and as long as customer service treat both new and second owners as the same, there is no reason to restrict the entry of refurbished handsets in India. In addition, with increase in competition, consumers will benefit from lower prices.