China calling: Unbranded high-tech handsets ring a new threat

And this time, these are not entry-level phones but mid-level, feature-rich products at aggressive prices between Rs 2,000 and Rs 5,000. Most of these, branded mobile manufacturers said, would cost consumers at least three to five times more if they came from them.

Mobile manufacturers through the Indian Cellular Association (ICA) estimate that 600,000 to 800,000 Chinese unbranded phones are making their way to India every month, accounting for 8 to 10 per cent of GSM-technology mobile phones sold in the country.

According to research firm IDC, China shipped 85 million GSM handsets in the last fiscal. And it says China's percentage share is likely to go up since these phones offer swanky features ranging from 3 megapixel camera, terrestrial TV, music and MP3 players.

Also leading branded mobile stores have started stocking such phones and are even offering warranties. For instance, Spice Group-owned mobile retail chain HotSpot imports Chinese mobile phones and provides its own warranty and back-end service support for the handset.

"Demand for feature-heavy phones is increasing by the day, and Chinese phones are extremely high-end ones in the price range of Rs 2,000 to Rs 6,000," said Sanjeev Mahajan, CEO, HotSpot, adding, "The margins for such products are also more lucrative for us. On a Chinese phone we can earn margins up to 15 per cent; on branded phones we earn merely 5 to 6 per cent."

But branded mobile manufacturers are stumped with the growing numbers. The issue of anti-dumping duty has been discussed with the government but rejected because most of the leading branded manufacturers too make and import phones from China.

"This is an open and competitive industry and these products come through an open channel. The entry of Chinese products follows a fair amount of competition for all players," said Sunil Dutt, country head for Samsung's mobile business in India.

There are others who are concerned. "It will be a compromise on the part of the consumer in terms of quality and value for money," said Lloyd Mathias, marketing director, Motorola, highlighting the need for stricter norms for quality control.