At the 40th annual General Body Meeting of the largest Indian organization Reliance Industries, its chairman Mr. Mukesh Ambani, who is said to be the richest man in India today, has announced that Reliance would launch a 4G feature phone in September 2017 that would be given free to the customers. It was further reported that the announcement was received with huge cheers by the shareholders.
So far, in India, products and services are offered free (which go by the name freebie) to the citizens belonging to lower income group, mostly by the governments. To get the resources for such freebies, the states would increase its revenues by imposing additional taxes in a variety of ways. For the first time, a private sector organization is offering such freebie (free jio phone) on a massive scale.
In the past, in India, we have heard many stories about several individuals and private organizations enticing gullible people with various attractive offers, collect huge money and then fade away.
We have heard cases of individuals offering to multiply currency notes and people succumbing to the temptation and handing over hard earned money and finally getting cheated. We have also seen several financial companies offering huge interest on deposits, collecting crores of rupees from gullible people, paying interest for a few months and then fading away from the scene. Several police cases are under investigation all over India. While a few culprits have been arrested and punished, most of them roam free by prolonging the cases in the courts by using the loopholes in the law.
When the free jio phone offer of Reliance was made, the carefully thinking people are bound to doubt as to whether such scheme is genuine and feasible or have hidden elements in them that cannot be seen by the gullible and innocent people, who may fall prey to such schemes without investigation and succumb to the temptation.
While it is said that Jio phone will be provided free, the users are asked to pay a security deposit of Rs. 1500/- that is refundable after three years when the phone would be returned. Nothing has been said about the acceptance of the phone that would be returned after three years, irrespective of its condition. In all probability, phones used for three years may have developed some problem, parts may have been replaced and would not be in the optimum standard. Will Reliance guarantee that security deposit would be paid back irrespective of the condition of the phone that would be returned? The multi-millionaire chairman of Reliance is conspicuous by silence on this point so far.
Of course, if Reliance would sign up 250 million customers and put their security deposit collected in the bank, it would earn around 460 million dollars as interest per year. This could be even much more if Reliance would use the funds to invest in various other projects that provide a high rate of returns.
Today, the cheapest 4G phone available in the Indian market cost around Rs.3000/-. It is not clear as to what would be the cost of production of Jio phone that would be produced by Reliance for free distribution. It is said that Jio phone has been developed in house by Reliance, but the actual phones would be made by third party equipment manufacturers like Foxconn and Flextronics. It is also not clear as to what extent the phone would be manufactured in India or abroad. This may not fulfill the objective of the Make in India campaign, as claimed by Reliance.
There is a catch in the scheme in that; Reliance insists that the phone will be locked down to work only on R jio’s 4G network. In other words, the users are denied the privilege of opting for any one of the multiple networks.
Further, it is claimed that Jio phone will offer the users unlimited voice and data just for around Rs. 153 per month. There is no sanctity about this tariff since Reliance can always increase the tariff over a period after ensuring that the targeted number of consumers would be brought in its fold, who would have paid security deposit Rs. 1500 and do not have the option of using another network with Jio phone. There is no assurance from Reliance that the tariff would not be increased at least for three years.
If a consumer would be dissatisfied with the performance of Jio phone or would be unhappy in the event of Reliance raising the tariff after a few months, then what are the options left for the consumer? In such a case, he will have no alternative other than spending more money to move on to some other feature phone and network.
It is naïve to believe that an organization like Reliance which has been extremely clever and tactical in the past in its choice of projects, managing government machinery to its advantage and have multiplied its profit and income several folds, would just offer free services without huge and commensurate benefits to it, that may not be visible to the gullible public.
Possibly, Reliance must be calculating that with its free phone strategies, it can eliminate the competitors in the market and become a near monopoly and then have its way and dictate the market.
Naturally, Reliance commands huge resources built over several years by operating projects with a huge margin and without passing on the benefits to the consumers by price reduction for its products. One can expect that Reliance would continue to adopt such practices and ultimately it will have the last laugh.
The faith of Reliance Chairman in the simple nature of Indian consumer, who falls flat for any freebie scheme, is immense.