India’s smartphone industry has shown a decline in sales since 2019. This is because it is believed that India is at a “tipping point” with the growth of the middle class.

Some of the reasons which comes forward is the sluggish demand and increasing consumer preference for refurbished smartphones.

Senior Research Analyst Shilpi Jain said on the current market dynamics that they are observing a change in consumer behavior. According to their observation, demand is now higher around promotional periods. For this, they gave the example of how in the beginning of the quarter, there was a surge in demand because of the Republic Day sales, and after that the demand dropped significantly.

There are other significant reasons behind the decline in the India’s smartphone market, and these are as follows:

Decrease in the Shipment of Smartphones

As mentioned earlier, with the opening of two of Apple’s stores—one in Mumbai and the other in New Delhi—cheaper rivals are finding it hard to sell their phones. In fact, according to research firm International Data Corporation (IDC), 31 million smartphones were shipped to India during the first three months of 2023, which was 16% lower than at the same time in 2022. Moreover, this shipment is considered the lowest first-quarter shipment in four years. IDC also highlighted that demand for smartphones declined because of an uncertain economic outlook and because stockpiles of handsets remained high.

Premiumization: Premium brands of Smartphones VS Cheaper brands

Another reason that the analysts have given for this is “premiumization.” This is a phenomenon that happens when wealthier consumers move towards more expensive products. However, brands like Apple and Samsung highly benefit from this, and comparatively cheaper brands like Xiaomi and Realme see a decline in their sales. If seen from a bird’s eye, the contrast between Apple’s sales and the shrinking market for cheaper devices shows an uneven post-pandemic recovery in India.

India Ratings and Research said that the population in the lowest half of the income pyramid is suffering because of the K-shaped recovery, which is preventing broad-based consumer demand from developing and hindering wage increases. It further stated that although demand for luxury goods like cars, cell phones, and other products is evident, desire for items for mass consumption is still depressing.

Decline in Scooter Sales

To understand this better, take the example of how, before the pandemic hit, the sales of entry-level scooters declined by 20% in April of this year compared to April of 2019. This clearly shows that customers with lower incomes “were hesitant to upgrade”, according to the president of the Federation of Automobile Dealers Association, Manish Raj Singhania.

Problems within the rural economy

On the other hand, one scenario that cannot be ignored is the ongoing problems in India’s rural economy, which have further worsened because of extreme weather and climate change. While spending on household goods and services saw an increase of 20% in March 2022, it has declined sharply this year. It must be noted here that the credit for this also goes to rising interest rates and high inflation in the country.

It must be noted that the smartphone market in India is currently driven by Apple and Samsung, and so, analysts are expecting a modest growth this year. But, to get this growth, it is essential that 5G devices and other market drivers offer compelling utility for consumers.

But as it is being said, global smartphone market as a whole is likely to struggle for the next couple of quarters because of various factors such as low consumer confidence, problems in the supply chain and most importantly, the continuous increase in the price. 

Proofread & Published By Naveenika Chauhan