Last year India’s $4 smartphone generated a lot of buzz in the mobile phone industry around the world. Mohit Goel and his company Ringing bells promised an ultra-low budget 3G smartphone for just 250 Indian Rupees.

It sure does “rings a bell” and people in mobile phone industry termed it too good to be true. Experts said that if they have a sold a phone for $4 they would lose $26 for every device it sold.

Surely it was all smoke and mirrors but somehow they managed to Indian media by showing them fake rebranded phones. That’s how they got many distribution contracts and a go ahead from Indian government as well.

Can you make a 3G Smartphone in $4?

No it is simply not possible, even some big manufacturers like Foxconn can’t think about pulling off such a miracle. If you don’t include manufacturing costs the components alone would cost more than $20 at the minimum.

So basically the Indian company tried to get incentives from government by making false claims and also got huge money from distribution partners.

Distributors got Scammed:

Soon after the distributors realized that they have been scammed they asked for their money and moved to the courts when they were threatened by the company.

According to a report from CNN some of the money was returned, but police has now arrested the founding director Mohit Goel on the suspicion of fraud, search for other directors is underway.

One of the company’s distributors, Ayam Enterprises, has accused Goel and four associates of cheating them out of $24000. Police suspects that the total amount could reach $100,000 as several more distributors have filed similar complaints.