The Telecom Ministry is believed to have sought clarification from Ringing Bells for marketing its 'Freedom251' mobile phone without BIS certification and have asked UP government to check its credentials, as per BJP MP Kirit Somaiya.
"#Freedom251 Telecom Ministry called clarification for marketing without BIS certifications & also asked UP Govt to check Bonafide of Company," Somaiya tweeted.
The BJP MP has approached telecom ministry, telecom regulator Trai, Consumer Ministry, SEBI, Corporate Ministry Finance Ministry, RBI and state governments to check various concerns that he has on company offering mobile phone for Rs 251-- which is the world's cheapest.
"#FREEDOM 251 mobile set @ 251 #TRAI Chairman & Telecom Ministry assured me appropriate step Buyer must check twice," said in another tweet.
No comments were received from the Telecom Ministry on query related to Somaiya's Tweet.
Noida-based company Ringing Bells today started booking for the phone for Rs 251 and has said that delivery of all handsets will be completed by June 30.
Ringing Bells' President Ashok Chaddha said manufacturing cost of the phone is about Rs 2,500, which will be recovered through a series of measures like economies of scale, innovative marketing, reduction in duties and creating an e-commerce marketplace.
"By going for Made in India components, we can save on the 13.8 percent duty. Also, we will be selling online first and thus save the costs incurred on large distribution network," he said.
Chaddha also rejected speculations of the handset being subsidised by the government.
"The phone will be manufactured in Noida and Uttaranchal.
Two plants will be set up for Rs 250 crore each with a capacity of 5 lakh phones. The money will come in the form of debt and equity (1.5:1)," he said.
Chaddha added the equity is being met by the promoter family of the company that is "engaged in agri-commodities business" in Uttar Pradesh but declined to give further information.
Somaiya as well as industry has not found the proposition convincing.
"From the response I read of Shri Ashok Chadha of Ringing Bells that how much cost will be saved due to import/local assembling/ online marketing... far from convincing," Somaiya said in a letter attached to his tweet.
Mobile phone industry body ICA too has raised red flag on offering of the company.
"We have checked with all operators in the industry and no one has admitted to have been in any kind of bundling deal or partnership with them. I will only say consumer should stay cautious. More than consumers, it may hurt businessmen in small towns if the promise made by the company fails," ICA National President Pankaj Mohindroo said.
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