CHENNAI, Dec 25: The recent volatility in currency markets has forced cellular handset manufacturers to consider the possibility of an upward price revision in the near future.

All brands and models of cellular handsets have to be imported into the country and with the rupee steadily depreciating against the dollar, imports have become costlier, especially if the order has been negotiated in Indian rupees instead of a dollar contract.

Motorola executive director BV Raman said: "Till now we have been importing handsets from our factories abroad and supplying to service providers who will pay us in Indian rupees; but now with the fall in the rupee value, we will have to look at a slight increase in the price to make the imports viable."

And though the manufacturers had taken a forward cover to protect their interests, it was not enough to provide adequately for the steep fall in the rupee value. So the alternative is a price hike.

The other side of the coin is manufacturers who charge in dollar for the handsets. Though not affected directly, the cost for the service providers who are the bulk buyers is higher and hence the higher cost will have to be borne by the consumer.

This possibility has dawned on finance managers of all cellular service companies and the knowledge does not cheer them up one bit. Most of them acknowledge that the price of the handsets must move upwards, but this revision is likely to hit their margins too.

With no boom in sight at the demand level, they have to think twice before increasing the prices. But the fact is that they have no alternative. Already, the handsets are heavily subsidised and the company bears a part of the subsidy.

With margins already thin, service providers cannot afford to maintain prices at the current levels if the manufacturers decide to hike the costs.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.