"The Ministry has analysed the issue and it feels that such a device can be manufactured for about Rs 2,300," sources said. However, they refused to say if any action will be taken against the company in the matter.

Earlier this week, Noida-based firm Ringing Bells launched the world's cheapest phone –  Freedom 251 – priced at Rs 251, hogging limelight globally.

Indian Cellular Association, which represents the handset makers industry in India and has members like Apple, Samsung, Microsoft, Lava and Micromax, had also written to Telecom Minister Ravi Shankar Prasad.

The body said the bill of material value for a product like this when sourced from the cheapest supply chain cost approximately USD 40 (Rs 2,700). When translated into retail price after addition of applicable duties, taxes and distribution and retail margins, the cost of the product would be at least Rs 4,100, it added.

ICA requested the Minister to get into the depth of the issue, saying the price could not be below Rs 3,500 even after a subsidised sale.

Ringing Bells, on its part, said the manufacturing cost of the phone is about Rs 2,500, which will be recovered through a series of measures like economies of scale, innovative marketing, reduction in duties and creating an e-commerce marketplace.

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