The Freedom 251 smartphone from India-based Ringing Bells is creating quite a stir worldwide thanks to its cost – just Rs. 251, which is approximately $3.65.

The company launched the 4-inch smartphone on Wednesday and the preorders for the handset opened on Thursday. The response was so overwhelming – six lakh visitors per second – that the Freedom 251 site crashed!

The question raging on everyone's mind is how come the Freedom 251 smartphone is so cheap? How is it that a smartphone with iPhone-like icons and reasonably decent specs can command such a low price?

Ashok Chadha, Ringing Bells's president, has divulged that the actual cost of the Freedom 251 smartphone is Rs. 2,500 (approximately $37). However, the company has priced the smartphone under $4 to benefit from economies of scale, which will aid it in sustaining itself despite the cheap price.

"The Indian market is at 2 crore (20 million) units a month. If you take 30 percent of that, then you achieve economies of scale," said Chadha.

The company intends to recover its capital through the creation of an e-commerce marketplace, innovative marketing and reduction in duties. While no government subsidy is in play, Ringing Bells is banking on economies of scale to turn profitable.

The Indian Cellular Association estimates that the cost of the Freedom 251 smartphone should be nearly Rs. 4,100 (approximately $60) and not Rs. 2,500 as claimed by Chadha.

How Ringing Bells intends to follow through with its assertions is circumspect. For starters, the company that claims others will be able to use its website as a platform for selling products is unable to manage its site – Ringing Bells's site crashed even before the company could take the first order for Freedom 251 smartphone. The site is still down at the time of writing.

Ringing Bells has asserted it will take four months to deliver the smartphones to the consumers. Considering the site has nearly 6 lakh visitors per second and even if a lakh of those purchase the smartphone online, that's a huge amount Ringing Bells will be having in its pocket.

For those thinking that Ringing Bells will be able to earn a good interest on the sum for a good four months, that will not be the case. However, the company's director Mohit Goel has clarified to The Economic Times that the money being collected by the company is in an escrow account. Ringing Bells will not be getting access to the cash till it fulfils all its deliveries – 30,000 so far as it has revealed.

The maximum orders it will take online are 25 lakhs and 25 lakh orders will be taken offline as well. All deliveries will be start in April 2016 and completed by June.

To preorder your Freedom 251 smartphone for Rs. 291 (Rs. 40 shipping fee included) head to this link.