Alarm bells ring as millions of Indians left waiting for world’s cheapest smartphone

Launched amidst intense fanfare, the Freedom 251 smartphone was touted to be the world’s cheapest, designed to bring the internet to millions of Indians. But in the week since, controversy has swirled around Ringing Bells, the company behind it, and the phone itself has proven deeply elusive.

Murli Manohar Joshi, right, a senior leader of Bharatiya Janata Party, unveiled the Freedom 251 mobile phone in Delhi last week. Reuters

NEW DELHI // In a middle-rung New Delhi restaurant, 251 rupees – less than US$4 – will buy you a sizeable salad. Ringing Bells, a company based in the capital’s suburb of Noida, promises that 251 rupees can buy you its new smartphone.

Launched amidst intense fanfare, the Freedom 251 smartphone was touted to be the world’s cheapest, designed to bring the internet to millions of Indians. But in the week since, controversy has swirled around Ringing Bells, and the phone itself has proven deeply elusive.

“This is a Ponzi scam,” Kirit Somaiya, a parliamentarian from the ruling Bharatiya Janata Party (BJP), said on Friday. Mr Somaiya, who claimed to have read through the company’s documents on file with the government, wrote to the ministry of telecommunications that day, urging a probe into Ringing Bells and its investors.

On Tuesday, a ministry source, told The Hindu newspaper, that Ringing Bells officials had been summoned for a meeting to “explain their business model”.

In the meeting, Ringing Bells said it it will have to import its first 5 million phones, despite previously saying otherwise. The company can make its own phones only after it sets up two factories, at an initial investment of 3.5 billion rupees, over the next eight months.

The Indian Cellular Association, a body of manufacturers and service providers in the mobile phone industry, has also complained that the Freedom 251 has not been certified by the government’s Bureau of Indian Standards as safe for consumer use.

Last Wednesday, before the launch, which was to be presided over by India’s defence minister Manohar Parrikar, I emailed members of Ringing Bells’ media relations team. Would they send me a Freedom 251, so that I could write about it?

I received no response. Later that day, Mr Parrikar mysteriously skipped the Ringing Bells event, so Murli Manohar Joshi, a senior Bharatiya Janata Party (BJP) member, launched the phone instead.

Ashok Chadha, the Ringing Bells president, claimed at the event that Freedom 251 would be manufactured entirely in India, in keeping with the BJP government’s Make in India scheme to boost the manufacturing sector. Soon, he said, his company will make 20 million phones a month, in factories in Noida and the state of Uttarakhand.

The family funding Ringing Bells, Mr Chadha said, wanted to remain anonymous: “We are not looking for avaricious profits but sustainable profits.”

Mr Chadha also explained how the phone could be priced so low. The company intends to convince governments to waive duties, sell the phone only through its own website, and take advantage of Make in India tax benefits and economies of scale.

The next day, last Thursday, I visited the company’s website to buy a phone, which I would receive, according to the fine print, any time before June. None of my orders went through. That evening, orders were suspended. The website was getting 600,000 hits a second, the company said – too many for its servers to handle.

Sixty million people had registered to get a phone, Ringing Bells added, and it was now aiming to deliver 5 million phones by June 30. The company collected 17.5 million rupees in online payments before it stopped processing purchases and began maintaining a registry of interested customers who will be asked to pay when phones become available.

After failing to buy a phone online, I called Prasoon Ghosh, a communications officer for Ringing Bells, and introduced myself. Did the company have any units at all to give out for review?

“No, we don’t have any at all,” Mr Ghosh said.

“Is there a phone around that I can just borrow, even for a day?” I persisted.

“No, there isn’t,” Mr Ghosh said. Then he admitted: “In fact, I haven’t seen the phone myself.”

But others apparently had. In a few Indian newspapers, withering reviews of the phone appeared. In appearance, Freedom 251 was a knock-off of the iPhone, with a decal on the back of the Indian flag. Under a thin coat of white paint that was easily scratched off, the brand Adcom was visible, engraved upon a cheap plastic body.

Adcom, an Indian firm, imports Chinese phones from contract manufacturers and rebrands them. When this news broke, Ringing Bells issued a statement, acknowledging that its preview units were imported, but that they were only intended to provide an idea of what the final phone would look like.

On Friday, angry customers who had failed to book their Freedom 251 online began protests outside a shuttered Ringing Bells office in Noida, demanding that they be allowed to purchase their phones in person.

Later that day, a federal income tax team visited the office, prompting rumours that Ringing Bells was under suspicion for tax fraud. In a statement, however, Mr Chadha said: “Yes, there was a visit ... Since we are planning to achieve milestones under Make in India ... they issued us some guidelines for the future and extended full support and cooperation.”

From the website of the ministry of corporate affairs, I pulled up the registration of Ringing Bells Private Limited, to discover that it had been incorporated only in September. Three directors – Sushma Devi, Rajesh Kumar and Mohit Kumar – were listed, but no phone numbers were provided.

In the case of Mohit Kumar, his official address in the town of Muzaffarnagar begins: “Opposite Yogesh Courier.” There is no street name or house number.

On Saturday morning, I made the trip to Noida myself. A small crowd had collected outside the heavy rolling gate of the building in which Ringing Bells occupied the second floor. No one was allowed in.

A security guard was stationed in a small cubicle, on the outside of which hung a signboard with the words “Bell – everyone just a call away.” He informed me that no Ringing Bells staff had come to the office over the past two days.

To make conversation, I asked him if he had seen a Freedom 251 phone. He hadn’t, he said, but he had spotted large ads for it in newspapers. Then he pointed to the iPhone in my hand and said: “It looks just like that, doesn’t it?”