No Cost EMI Under Fire Retailers Say Ending It Could Slash Smartphone Prices

Buying a new smartphone could become less expensive in the future if the mobile retail industry succeeds in its latest demand. Retailers across India are urging smartphone brands to reconsider the popular No Cost EMI model, arguing that the scheme increases the overall price of devices even for customers who never choose installment payments.

The discussion has gained momentum after the All India Mobile Retailers Association called on leading smartphone makers including Samsung, Apple, Xiaomi, Vivo, Oppo and Realme to discontinue No Cost EMI offers. According to the association, the financing cost of these promotions is already included in the retail price of smartphones, resulting in higher prices for every customer regardless of how they pay.

Retailers believe that while No Cost EMI appears attractive because buyers avoid paying visible interest, the expense does not disappear. Instead, manufacturers reportedly absorb the financing charges and recover that amount by increasing the product’s selling price. As a result, even customers paying the full amount upfront may unknowingly bear part of the financing cost.

Industry estimates cited by retailers suggest that offering No Cost EMI for up to 24 months can cost companies between 17 and 19 percent of a smartphone’s value. They argue that these additional expenses eventually become part of the final retail price, making devices more expensive than they would otherwise be.

Instead of the current financing model, the association has proposed shifting to traditional consumer loans where customers who choose financing pay the applicable interest themselves. According to AIMRA Chairman Kailash Lakhyani, this system is already widely used in sectors such as automobiles and housing and could help reduce the base price of smartphones.

Retailers also believe that banks and non banking financial institutions could offer more flexible loan options under the traditional model. Loan tenures of up to 48 months could provide buyers with greater affordability while allowing manufacturers to sell phones at lower starting prices. They argue that this approach could expand financing opportunities without increasing costs for customers who prefer one time payments.

However, industry officials have presented a different perspective. They say removing No Cost EMI would transfer the interest burden directly to customers choosing installment plans. While buyers paying the full price upfront could benefit from lower retail prices, those relying on financing would need to pay interest as part of their loan agreement.

Supporters of the proposed change also argue that the interest charged under regular consumer loans is often lower than the cost manufacturers currently absorb to provide No Cost EMI offers. They believe this could create a fairer pricing structure where only customers using financing pay its associated costs.

To strengthen its argument, the retailers association pointed to examples of smartphones with similar hardware but different pricing. According to the association, certain models such as the Realme C83 5G are priced higher than comparable devices like the Realme P4 Lite despite offering similar specifications. Retailers believe financing related costs may be one of the factors contributing to such price differences.

The debate has now raised broader questions about how smartphone financing should work in India. While No Cost EMI remains a popular marketing tool that helps consumers spread payments over several months, retailers argue that greater pricing transparency could ultimately benefit the wider market. Whether manufacturers decide to change their financing strategy remains to be seen, but the discussion has opened a fresh conversation about the true cost of buying a smartphone.