Explained! Why Redmi Note 5 Pro to cost Rs 1,000 more

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Xiaomi has just made an announcement that one of their most recent phones, Redmi Note 5 Pro, and the Mi LED TV 4 55-inch are set to cost higher by Rs 1,000 and Rs 5,000 respectively from May 1. The revised price of the Note 5 Pro will be Rs 14,999 while that of the Mi LED TV 4 55-inch will be Rs 44,999.

This is due to the increased demand of the said smartphone that Xiaomi is unable to match in the Indian market. To handle this situation, Xiaomi is having to import a significantly large number of PCBA units from China to India since their Indian production plant (that manufacturers PCBA) in Chennai is unable to cope up with the rising demand of the phone in the market.

Redmi Note 5 Pro dual camera

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A PCBA is basically a motherboard in a device like a smartphone which has various other electronic components attached on it. As per Xiaomi, their production capacity will not be ramping up to 100% before Q3 (or 3rd quarter) of 2018. Hence, to avoid a situation where the Redmi Note 5 Pro might become unavailable in the market, thereby hurting the sales, Xiaomi is importing manufactured PCBA units to keep the availability of the phone unaffected.

Furthermore, the price increase is the result of the revised tax structure by the Indian government, including tax revisions on things like PCBA import, which constitutes 5% increase on the import of PCBA units from the start of 2018 (from the previous 5% to 10% now precisely). Usually the manufacturing cost of PCBA is around 50% of the whole cost in a smartphone, and Xiaomi has very tight margin for their mid-range and lower-range  smartphones.

However, Xiaomi has made it clear that all pre-bookings of the Redmi Note 5 Pro done so far will be honored with the current price of the phone, which is Rs 13,999 (for the 4 GB RAM/64 GB storage variant), even if the phone will be delivered to the customers on or after May 1. Additionally, the price of the higher-spec Redmi Note 5 Pro with 6 GB RAM remains unaffected, which is also easy to understand because higher models have bigger margin.

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