Ranjan Roy, a content writer, had waited to buy a digital SLR camera for a full year. He had saved every penny he could, hoping to meet the Rs 43,000 price that the camera commanded in the city’s grey markets. Once he had the cash, the dream gadget landed in his hands. Without a memo and the warranty papers, of course, but did that really matter?

It did. A couple of weeks later, the autofocus mechanism began to wind up, and upon taking the camera to an authorised servicing centre, Roy was told the company wouldn’t fix it without valid documents. Roy had to settle for the neighbourhood repairman, who made the problem worse. Within days, his gadget had been reduced to a worthless piece of junk.

While most buyers don’t think twice before opting for tempting deals that the grey market offers them, there are a few hiccups that come with such purchases. Not everyone ends up unlucky. But once in a while, someone does get a faulty gadget passed on, which is when the ordeal begins. So how does one steer clear of such problems?

First things first. Grey market purchases always make sense financially as the prices are substantially lower than the white market rates. Roy’s camera, for example, would have cost him nothing less than Rs 70,000 if he had bought it from an authorised reseller. A regular grey market buyer reveals that a 42 inch LCD TV, otherwise sold at a price upward of Rs 1.5 lakh, is available at a Bangalore grey market for at least Rs 40,000 less.

Why does this happen? The answer lies in cross-border formalities and taxes. “The price difference is because of high customs duties followed by VAT levied on the sale of our products. The gap is permanent because of this reason,” says Prashant K. Singh, marketing head, imaging products, Nikon India. Besides, there are other costs such as shipping and overhead expenses, and it is to recover these outlays that the prices of white market goods increase considerably.

Grey market dealers often get around such costs by ordering a large consignment of the same products from another country, where they are marketed at lower prices. “It’s like buying an appliance in another country and then carrying it back to India,” explains a gadget dealer in Delhi’s Chandni Chowk area. “That way, there are no customs duties to be paid and we don’t have to bear the overhead costs that a company has to in maintaining support centres. This allows us to sell things at a bargain,” the dealer says.

Since importing large consignments isn’t wholly illegal, especially for electronic goods, the grey market is not something that can be weeded out easily. On the contrary, buyers continue to throng third-party dealers since goods often reach these vendors quicker than they reach authorised resellers. The choice of goods is often wider too, since things officially not sold in one market can always be shipped in from another country.

The downside, however, is that grey market goods don’t come with warranty papers, which are pulled out of the product boxes by sellers before putting them on sale. Some dealers, on the other hand, give customers a choice. For example, a well-known store in Mumbai sells electronic goods, with buyers having the option of taking them with or without papers. “If a buyer chooses not to take the warranty, we give him the goods at going grey market prices,” says the proprietor.

It’s a dual norm followed by several grey market dealers. There is a catch here, though. “Some resellers, when asked for a warranty, furnish papers that apply to the country the goods were originally purchased from,” says technology analyst Tushar Kanwar. Electronics companies, explains Kanwar, often follow the practice of providing country-specific warranties, since they sometimes choose to sell certain products in selective markets. “If one thus takes a product to a service station in a country where its warranty papers are not valid, one would probably not be offered any kind of support for the product,” adds Kanwar.

Besides, goods moving through grey market channels are more prone to damage while shipping, and companies are likely to wash their hands off such damages. Then, since gadgets are often produced by companies keeping local weather conditions such as temperature and humidity in mind, goods produced for one region may malfunction when used in another region, with no free service back-up to fall back upon.

Even so, the grey market, while not being able to offer such perks, does have its own kind of assurance to offer to buyers. While there are no documents that can be furnished as proof of purchase, regular buyers say that it helps to strike a long-term relationship with grey market dealers, with whom deals are made on the basis of mutual trust.

Shankar Sengupta, a Delhi-based media professional, for example, goes all the way to a particular dealer in Calcutta’s Fancy Market every time he shops for gadgets. “I once bought a camera which wasn’t exposing properly, but upon taking it back to him three days later he promptly swapped it with another body without asking a single question,” says Sengupta. “If that’s the kind of support I get in the grey market, what’s the harm in buying from there,” he asks.

Especially when things there come for a song.