Mint explainer: India’s $50 billion question: How to sell more smartphones?
Despite the Diwali boost, India’s smartphone sales are likely to remain below the 2021 peak.
NEW DELHI : A consensus estimate from eight retailers across India indicates that they sold 15% more smartphones during this festive season—the four weeks leading up to Diwali, which account for more than a third of annual smartphone sales.
While this would typically imply a robust market, analysts project that 2025 will still record fewer sales than the 2021 peak.
Mint explains why India, once the world’s fastest-growing market for smartphones, has remained stagnant for four straight years, despite seeing a surge this festive season.
Why are strong smartphone sales so important for India?
India is the world’s fifth-largest retail economy, and a tenth of all retail sales come from consumer electronics. Smartphones, which generate nearly $50 billion in revenue annually, account for over 40% of consumer electronics revenue—and nearly 4% of the $1.4 trillion domestic retail industry. This makes them a significant contributor to the overall gross domestic product (GDP).
Over the past decade, a robust smartphone market has brought global brands to Indian shores. China-headquartered Xiaomi and BBK Electronics, which owned Oppo, Vivo, Realme, OnePlus and others, dominated the market.
It is on the back of this volume that India has become one of the largest assembly destinations for the global smartphone supply chain. A strong domestic market, in turn, is essential to electronics manufacturing, increasing in local value addition, thus being key to the Centre’s goal of realizing a $500-billion electronics market by 2030.
Has the market been growing in revenue?
Technically, yes. In 2021, the market reached its peak in terms of volume, with the sale of 161 million units, according to data from market researcher International Data Corporation (IDC). By 2024, the number declined 1.6% annually to 151 million units.
Throughout this period, industry executives have maintained that while fewer people are buying smartphones, more are purchasing premium smartphones priced at ₹30,000 and above. Data from three market research platforms collated by Mint showed that the average price rose to ₹24,200 this year, up nearly 65% from ₹14,700 five years ago, driven by the premiumization push.
However, the industry’s revenue growth has not kept pace. In 2021, the smartphone market generated ₹2.4 trillion in annual revenue. This year, analysts project that it will generate ₹3.7 trillion in revenue. This represented an annualized growth of just 9%.
“The revenue and value growth are not a proportionate representation of the industry. Most of the value growth has been driven by financing schemes, which means that the revenue earned on paper is spread over a longer time. Additionally, the premiumization drive will only last for a limited period; the true growth hinges on first-time buyers. Right now, the market does not have first-time smartphone buyers, which proves that it is stagnating," said Upasana Joshi, lead for smartphones, wearables, smart home and Internet of Things at IDC India.
Which smartphones helped boost sales this year?
Eight retailers across the country said Apple and Vivo were the biggest gainers, with festive season sales rising 15% year-on-year. However, not all retailers expressed the same enthusiasm. Manish Khatri, a partner at Mumbai-based Mahesh Telecom, said demand has remained stagnant, and while premium phones, such as Apple’s iPhone 17, are generating customer interest, supplies are limited. He also added that while 80% of all smartphone buyers opt for financing, “many face rejection due to poor credit scores".
Does this hurt India’s electronics manufacturing, too?
Yes. On 17 October, Dixon Technologies, India’s largest electronics contract manufacturer, disclosed a 5% on-year decline in revenue from smartphone assembling—despite its revenue from China’s Transsion Holdings seeing a 130% sequential rise. This, however, implies shipments and revenue from brands such as Xiaomi and Motorola have declined ahead of the festive season.
IDC’s Joshi said the last three months of this calendar year are expected to see an on-year dip in sales. This may have long-term implications, as electronics manufacturing services catering to smartphone assemblies may see supply volumes plateau. With electronics manufacturing services expected to account for at least half of India’s $500-billion electronics revenue target by 2030, a slowdown can halt the industry as exports alone may not make up for the drop in demand.
What would it take for a turnaround?
Stakeholders have said India continues to have over 200 million feature phone users, compared to a total base of 750 million smartphone users, just over half the population. With wireless telephony penetration now exceeding 1 billion people, the feature phone user base represents the largest opportunity for brands and retailers to sell phones to more people.
However, most brands have run into a challenge: feature phone users—typically representing the lower-income segment—are not upgrading to smartphones over issues such as brittle displays and shorter battery life compared with basic, non-touch phones.
Existing smartphone users have also stopped upgrading devices regularly, since most phones now come with multi-year warranties and software upgrade plans of up to seven years. This means that most brands do not have a direct answer to bringing growth back to the market.
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