Credit: Screenshot from Gadgets 360 video (https://www.youtube.com/watch?v=aGe9Hr_9YEU)

An Indian company says it will start shipping a $4 smartphone this month. The move comes despite serious scepticism about the economics involved.

The phone, the Android-based Freedom 251, is far from exactly top-spec, but sounds perfectly serviceable for very basic use. It has a 4 inch, non-HD screen, 1.3GHz quad-core processor and 1GB of RAM.

The manufacturers, Ringing Bells, say 70 million people have registered an interest in buying the phone. It plans to ship 2 million units this month and then 200,000 a month after that.

Scepticism over the pricing even led to the company answering questions from the Indian government, with estimates that the lowest a comparable handset would normally retail for would be in the region of $40-50.

The company now says it will make a loss of around 140 rupees per handset, putting the manufacturing cost at a little over $6, a price it says is so low because of volume savings. As for making up those losses and turning a profit, the company says only that “innovative e-commerce cross promotions” are the key.