What is the actual Math behind Reliance Contract scheme for iPhone ?


Reliance finally after seeing lot Contract based Phones in USA recently came up with a solid idea of implementing a contract based iPhone 5c and iPhone 5s sales in India too

The scene isn’t new to the western world anytime but is surely new to prepaid customers in India. So today I will mention about the whereabouts of this scheme for general public ,who aren’t much aware of what they are engaging into.

Warning: The above Math is purely for informative purpose , any Apple Fan please don’t treat it as anything different and if you are die hard apple Fans you wouldn’t care too much to read about it

iphone 5s

The below table means you pay INR 2599 for an iPhone 5c and INR 2999 for an iPhone 5s as a 24-month Contract based EMI for 16 GB version and you pay the down payment if you want 32 GB or 64 GB (refer Table)


Though This offer from Reliance is unique and first of its kind in India and marks the beginning of subsidized contract-based smartphone sale in India. This has really stirred high-end smartphone industry in India and is definitely positive indication of similar future contract-based smartphone launch offers.

Now How Actually the Deal works?

  • iPhone 5c 16GB costs Rs.56376 with this bundled offer (incl. tax) on upfront payment (no monthly payment required for 2 years;One time)
  • iPhone 5s 16GB costs Rs.65976 with this bundled offer (inclusive of tax) on upfront payment.

Note : They Offer a INR 6000 Discount Discount for this Scheme

  • On EMI Payment via Only credit card, iPhone 5c costs Rs. 2599 each month for 24 months
  • On EMI for iPhone 5s, INR 2999 will be deducted each month for 2 years.
  • If purchased on EMI, The total cost for iPhone 5c INR 62376 and for iPhone 5s -INR. 71976
  • The entire amount of the transaction is blocked from your credit limit. You only pay the EMI to your card issuer.


Image Courtesy:Captialmind.in

The above pic displays the EMI + Interest cumulative distribution

So it means that in the first place you need to have following:

  • A Credit Card with atleast a limit of INR 75,000 (recommend)so then only you can pay for it and have the credit limit still left behind with you

E.g: You order a 5c 16 GB then you need to pay the INR 62376  amount upfront from your credit card and this actually is included in your billing so need to pay the additional Tax on this amount also

The Worst Part: This is a sort of loan taken by you from your bank,So need to pay 15 % interest too on it  That Amounts to

EMI Details

Image Coutesy:Thinkdigit

What is Still Unclear is the “Service Tax” to be paid to the Bank for this…If you account that too then it amounts to about after 24-Months

  • INR 1150 (for iPhone 5C 16 GB)
  • INR 1360 (for iPhone 5S 16 GB)

Note: The Banks which have this scheme are:

  • ICICI Bank
  • HDFC Bank
  • Standard Chartered bank
  • Citi Bank
  • The bundled offer (usage benefit) from Reliance is same for both the smartphone i.e. customer will get Reliance postpaid connection with Unlimited calls, sms, 3G, 2G, free roaming (incoming and outgoing) with NO FUP or speed capping.(No FUP means No Restriction on speed after certain usage)
  • iPhone is not locked i.e. you can use iPhone with any sim card/network of your choice.
  • The Reliance sim card/connection which comes with an iPhone doesn’t only work with an iPhone          

e.g: Say your Father buys an iPhone and doesn’t want to use it ,then he can change his SmartPhone and make use of the scheme on that phone(This is cool)

  • This reliance iPhone offer sim card/connection can not be used in USB Dongles so you can not use it in your 3G data card for internet.
  • Available in select cities only New Delhi, Mumbai, Chandigarh, Ludhiana, Bhopal, Indore, Raipur, Gwalior, Jabalpur, Amritsar, Jalandhar, Patiala, Jamshedpur, Patna, Ranchi, Bhubhaneshwar, Jaipur, Guwahati, Bhatinda, Cuttack, Siliguri Customer can also buy from any of the given cities with a local address proof and use it in their own city. Customer can also buy it online but before placing order, pin code checking is done to ensure that customer is from one of the given cities.
  • If you don’t have 3G in your Area then you can get 2G unlimited(but price is same; No cost benefit)
  • You can use MNP from other Carriers to switch to Reliance for this Scheme
  • Only GSM Networks ;No CDMA Offers

Can You Run Away With The Phone and Not Pay?

Of course you can. But that’s like saying “Can you steal from my Safe deposit from Bank ?”

Your loan is from a bank (that issues the credit card), not from Reliance. So if you  don’t pay, the bank will come after you for the loan. They will add you as a defaulter.

They don’t care whether you have decided to become an Android or a Windows fan, and they will not cancel the loan if you give back the phone. Your credit card will be blocked – because you’re a defaulting in front of them now.

And Once you are in Defaulter, you face many problems;If I list a few:

  • No Visa application can be filled
  • NoLoan application can be filled and if you are Guarantee for someone’s Loan ,even he suffers
  • They can Chase you for Generations ,So even your Grandsons will suffer

My adviceDon’t be like ADIDAS and Just Do it

What Reliance Benefits from this?

  • Reliance gets its Upfront Cost beforehand, it is the Bank who suffers after that; so in a way Reliance is Out of Picture when it comes to EMI installments
  • RCOM charges INR 62000 whereas Orginal Off-Contract Price is INR 53000 odd, so considering that they get the Phone for INR 40000 they make a INR 20000 profit straight away(speculation considering 650$ or INR 40131 US price)
  • India has many Apple fans who are ready to pay anything ,so RCOM even gets a Subscriber rise substantially

What is the Downside for this Scheme?

  • Network: RCOM doesn’t have the best network coverage in India nor for GSM nor for 3G ,so this might be a problem for many

ROI- Airtel-small

ROI Reliance CoverageCourtesy:Sensorly

This is the map of parts of West and South India, comparing the

Reliance network – bottom 

Airtel network – top

Airtel Mumbai rcom mumbai

This is Comparison of Network Coverage in Mumbai 

  • No Upgrades: Consider if you want a iPhone 6 or 6s(whatever) next year ,considering that only half of your installment will be paid by next year ;You can’t upgrade to it until and unless you pay the full Amount and the Contract Violation Charge + Down payment (if any)for that Phone

TL;DR: Who should Buy this?

  • Really want to buy the iPhone 5(S or C) with warranty
  • Don’t mind switching to the Reliance network, and
  • Don’t care about upgrading your phone for two more years, and
  • Don’t want 4G LTE (RCOM doesn’t offer it now)for free when it comes
  • Don’t have a problem with the limit getting blocked on your card,
  • Can afford this EMI (A must. Revolving credit costs on credit cards are ludicrously high)
  • Who generally have a INR 1000+ Bills

What is the Best Deal?

The 16GB iPhone 5s sounds like the best deal. It has ample storage for most uses and based on the calculation of Rs 2,999 EMI, it comes to Rs 71,976+1334(Service tax if bank charges)

That Totals to INR 72,310 including all costs for 24 months.

The unlocked price of the iPhone 5s base model is Rs 53,500, so in essence you will be paying a Rs 18,476 premium over the course of 2 years with the RCOM offer.

That’s about Rs 770 per month for 24 months.

Considering, The 4GB 3G data plan on RCOM is priced at Rs 450,(prepaid) this sounds like a Sweet deal indeed and is easily the best option to go with when it comes to buying the new flagship iPhone.


Paying a One time INR 65976  

Any Alternatives?

Yes, Airtel also offers the iPhone 5s for INR 53,500 upfront and then 50% discount for iPhone users

Using Airtel vs Reliance: for iPhone 5s

Airtel(INR) Reliance(INR)
Upfront Cost 53,500 65,976
Installment EMI 0 2,999 (To Bank)
Calls Limited* Unlimited
DATA 3G Limited* Unlimited
Total(at end of 24 month) 77,500**  74130
Savings 12,000/year  3,000/year
Disadvantage while saving Restriction to calls ,3G DATA Need to pay for 2 years at one time

*Refer above table for Airtel Rates

**Airtel 2000 Scheme

Note: Upfront Price is One time in above list

So After Reading this ,Still Think that Reliance is offering it at very less price…Nah!

But the Scheme is definitely worth it, if you are wanting an Unlimited Scheme and Don’t mind staying with it for 24 Months

Finals Thoughts: This is a very common scheme in USA and when after using this scheme for years there USA citizens are now wanting to opt for Contract-free(like now in India) GSM sims for phones

So in a way ,we are again implementing something which the Western world has already played with and are fed up it

Lets see how it fares in India in time ahead….What do you think about it?

EDIT:Updated the Calculation

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