'Cheapest smartphone' maker arrested

Police have arrested the director of an Indian company that claims it's selling the world's cheapest smartphone on fraud charges.

Police say Mohit Goel was arrested in the northern town of Ghaziabad following a complaint that his company, Ringing Bells, had not supplied the handsets that a phone distribution company had paid for.

The launch of the smartphone priced at 251 rupees ($A4.79) in February 2016 was widely reported by the Indian media. Many customers who bought the phones said at the time that they were happy with them.

Police spokesman Rahul Srivastava said the arrest was made after the distribution company complained that it had paid Goel three million rupees, but had received handsets worth only 1.3 million rupees.