India develops £10 mobile

India built the world's cheapest car - the £1,250 Tata Nano - and has now unveiled the telecoms equivalent: the £10 “people's phone”.

The mobile handset, developed by Spice, the Indian telecoms group, is angled at the lowest end of the market. It has jettisoned all non-essential features, such as a screen. “It is just a phone,” Bhupendra Kumar Modi, the Spice chairman, who hopes to sell about 10 million in the next year, said.

Mobile phones priced under £20 account for a fifth of the global market. However, with half the world's population yet to make a phone call and Western markets becoming saturated, companies see huge potential in budget devices aimed at the developing world.

The telecoms industry expects the number of people owning a mobile phone to grow to four billion over the next three years, from three billion. With the people's phone, Spice is joining the race to sell handsets to the up-and-coming new generation of Asian, African and South American consumers dubbed “the next billion”.

The company, which is listed on the Bombay stock exchange and valued at about £1 billion, will begin selling its people's phone in Asian markets from next month. Spice has suggested that a £5 mobile is not far away.

Cheap products from India are already making waves around the globe. Tata, has been inundated with queries from non-Indians asking whether they can buy the “people's car”.

The 33bhp two-cylinder vehicle is priced at 1 lakh (or 100,000 rupees, about £1,250), excluding taxes. Tata will export it to the UK and other overseas markets in about three years.