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HomeTechnologyRBI's first rate cut in five years may boost demand for smartphones, electronic goods

RBI's first rate cut in five years may boost demand for smartphones, electronic goods

Lower interest rates on personal loans and credit cards will likely encourage spending on high-value items like smartphones, laptops, and televisions.

February 07, 2025 / 13:44 IST
Phone

The RBI’s first rate cut in five years could boost sentiment for smartphone and electronics, as EMIs are expected to get slightly more affordable, possibly driving demand, experts told Moneycontrol. The move comes after the income tax relief for the middle class, announced in the Union Budget 2025.

Lower interest rates on personal loans as well as credit cards may encourage spending on high-value items like smartphones, laptops, and televisions, said some experts. Read more here.

Faisal Kawoosa, analyst and founder at TechArc said financing has a crucial role in electronics sales, particularly for smartphones, laptops, and TVs.

Quick Take: Sanjay Malhotra’s first rate cut marks an important policy shift for RBI

“With the rate cut, consumers may opt for a higher-tier smartphone than originally planned—typically, buyers spend 25-30% more than their initial budget. Previously, brands like Samsung and Apple have benefited the most from this trend. On average, six out of ten smartphones are purchased through financing or card EMIs,” Kawoosa said.

Tarun Pathak, Research Director at Counterpoint Research, called the rate cut a back-to-back positive announcement for the middle class: first, the income tax relief and, now, the repo rate cut. "This will release much pressure for the middle, and we will likely see incremental spending this year. This will have a direct impact on purchases like electronic devices that have become central to the growing aspirational Indian middle class.

"We are increasing our forecast for consumer electronics sales this year by 1-2% ( impact to be seen from Q2 onwards). However, we are keeping a close eye on the weak rupee that's a headwind as it will impact the end consumer prices," Pathak said.

Sanyam Chaurasia, Senior Analyst at Canalys, pointed out that while urban smartphone demand has been steady, growth has been driven by demand from tier 3 and 4 towns. The repo rate reduction will enhance affordability, further boosting sales in these regions.

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Danish Khan
Danish Khan is the editor of Technology and Telecom. He was previously with the Economic Times and has tracked the sector for 13 years.
first published: Feb 7, 2025 12:06 pm

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