India’s smartphone retailers have urged leading mobile brands to discontinue zero-cost EMI schemes, arguing that these financing offers are making smartphones more expensive rather than more affordable. The All India Mobile Retailers Association (AIMRA) has proposed replacing interest-free EMI plans with standard interest-bearing loans, claiming that the current model embeds financing costs into handset prices, forcing even cash buyers to subsidize EMI users. The proposal comes as smartphone prices continue to rise due to higher component costs, premiumization, and increased marketing expenses.
According to retailers, brands currently bear the interest cost charged by banks and non-banking financial companies (NBFCs) under zero-cost EMI schemes. To recover these expenses, manufacturers reportedly build the financing cost into the retail price of devices. AIMRA believes eliminating these schemes would allow brands to reduce the base price of smartphones, making them more affordable for all consumers while allowing those who need financing to opt for regular EMI loans.
Retailers Seek an End to Zero-Cost EMI
The proposal has been submitted to major smartphone brands, including:
- Apple
- Samsung
- Xiaomi
- Vivo
- OPPO
- Realme
Retailers argue that instead of subsidizing interest-free financing, companies should:
- Reduce handset prices.
- Offer transparent pricing.
- Allow banks and NBFCs to provide standard interest-bearing loans.
- Improve affordability through lower upfront prices rather than hidden financing costs.
Proposal Snapshot
| Item | Details |
|---|---|
| Proposal | End zero-cost EMI schemes |
| Suggested Alternative | Regular interest-bearing loans |
| Objective | Lower smartphone base prices |
| Submitted By | All India Mobile Retailers Association (AIMRA) |
Why Retailers Oppose Zero-Cost EMI
Although marketed as “interest-free,” zero-cost EMI is not free for manufacturers.
Retailers say the process works as follows:
- Banks charge interest on the loan.
- Smartphone brands pay this interest to the lender as a subsidy.
- Brands recover that subsidy by increasing the handset’s selling price.
- As a result, even customers paying the full amount upfront indirectly bear the financing cost.
Industry representatives estimate that financing subsidies can account for a significant portion of a device’s retail price, particularly for premium smartphones.
Current vs Proposed Financing Model
| Current Zero-Cost EMI | Proposed Model |
|---|---|
| Brand subsidizes interest | Customer pays loan interest if financing is chosen |
| Financing cost embedded in handset price | Lower upfront handset price |
| All buyers may indirectly share financing cost | Only borrowers pay financing cost |
| Promotes premium device sales | Aims for transparent pricing |
Rising Smartphone Prices Fuel Debate
The demand comes as smartphone prices continue to climb.
Several factors have contributed to higher prices:
- Rising semiconductor and component costs.
- Premium features such as AI capabilities and advanced cameras.
- Currency fluctuations.
- Increased manufacturing and logistics costs.
Earlier this year, retailers had urged brands to introduce 36-month zero-cost EMI plans to make premium smartphones more affordable as financing became increasingly popular. However, the latest proposal reflects a shift toward reducing headline prices rather than extending repayment periods.
Potential Impact on Consumers
If brands adopt the proposal:
Potential benefits
- Lower upfront prices for smartphones.
- Greater pricing transparency.
- Cash buyers would no longer subsidize financing costs.
- More competitive pricing across device categories.
Potential drawbacks
- Consumers choosing EMI would pay interest on their loans.
- Monthly installments could increase compared with zero-cost EMI offers.
- Premium smartphones could become less accessible for buyers who rely heavily on interest-free financing.
Brands Yet to Respond
Major smartphone manufacturers have not publicly indicated whether they will adopt AIMRA’s proposal.
Zero-cost EMI has become one of the industry’s most effective sales tools, particularly for flagship devices priced above ₹70,000. With financing now accounting for a large share of premium smartphone purchases, brands are likely to weigh the potential benefits of lower list prices against the risk of reduced demand if customers must pay loan interest.
Looking Ahead
The proposal to phase out zero-cost EMI schemes highlights a growing debate over smartphone affordability in India. Retailers argue that embedding financing costs into handset prices inflates the cost for all buyers, while replacing these offers with standard loans could reduce base prices and create a more transparent pricing structure. At the same time, zero-cost EMI has played a major role in driving premium smartphone adoption, making it a valuable sales tool for brands.
Looking ahead, whether smartphone makers embrace this recommendation will depend on consumer demand, competitive pressures, and financing trends. If brands choose to lower handset prices while shifting financing costs directly to borrowers, the move could reshape how smartphones are priced and purchased in India’s rapidly growing premium device market.
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