Government is now asking home-bred handset makers to launch smartphones in Rs 2,000 category

In a push to make India go digital, the Indian Government has now asked local handset makers to come up with smartphones costing less than Rs 2,000 that can enable financial transactions. The government has finally realised that cashless economy won’t be a success unless affordable devices are made available for people living in rural areas.

Reportedly, the government, in a meeting recently held by Niti Aayog, has asked Indian handset makers including Micromax, Intex, Lava and Karbonn to build low-cost phones that can take digital transactions to the masses.

However, Chinese players haven't been approached for this project while larger multinationals such as Samsung and Apple didn't attend.

"The government has begun enabling digital transactions, which are growing exponentially now, but they realize that there aren't that many low-cost smartphones in the market," a senior industry executives aware of the meeting told ET, asking not to be named.

Reportedly, the government is pushing handset companies to pump in 20-25 million handsets into the market, but has ruled out government subsidy. Instead, it is asking companies to come up with solutions to bring down the cost of the phone, which has capabilities to allow financial transactions.

"The government's aim is to allow financial transactions from anywhere, devices which should also have the ability of scanning for Aadhaar-based financial transactions in the future," another industry executive told ET.

Industry insiders though said key challenges will have to be addressed first for the project to get off the ground. Foremost, keeping the cost of the phone low while adding features like finger print scanner, high-quality processors and ensuring adequate build quality.

At present, 3G smartphones are available at starting prices of around Rs 2,500, while first 4G phones start at higher prices. Affordability and use cases are two big factors behind feature phone users being averse to switching to smartphones in the rural areas.

The government has set the agenda for pushing cashless transactions after it demonetised old Rs 500 and Rs 1,000 notes in November.