India's smartphone market sputtered in the March quarter, marking its worst start to a year in five years as zero-interest loans failed to tempt buyers sitting on the fence.
Shipments fell 12% from a year earlier to 28 million units, while the sale value shrank 6% or $500 million to $7.8 billion, consensus figures from analysts showed. Worryingly for the industry, this is the first time since at least 2020 that sales clocked a simultaneous decline in both value and volumes at the start of a year. The strategy of no-interest monthly instalments to push pricier phones seems to have stalled, at least for now.
Costlier cooking gas and fuel have raised the cost of transport and basic necessities, said Navkendar Singh, associate vice-president at market research and consultancy firm, International Data Corp (IDC) India. "This means that even though a smartphone today is almost an essential commodity, a new smartphone’s purchase will still go down in the order of importance, at least until the market stabilizes. In such a market, either brands or retailers will have to compromise on margins if they were to boost sales and keep the industry’s growth afloat,” Singh said.
Cost pressures
The March quarter slowdown coincided with the outbreak of war in West Asia that cascaded into financial markets worldwide, pushing up energy prices and dampening consumer sentiment. According to analysts at IDC India and Counterpoint, consumers are deferring purchases amid uncertainty. In 2025, India's smartphone market grew by a bare 0.6% to 152 million units.
On 7 April, Mint reported that each of India’s top smartphone brands raised phone prices by as much as 40% in many cases. The top five brands account for nearly two-thirds of the market, and despite price hikes, the slowdown is expected to impact them due to their broad market exposure.
EMI model falters
Maintaining value growth is critical for brands navigating what is now nearly five straight years of market stress in India. Sales peaked in 2021, when remote work and online education drove device upgrades.
Since then, brands have leaned heavily on no-interest instalment schemes to push premiumization. Between March 2022 and March 2026, the average selling price (ASP) of smartphones rose from ₹15,000 to ₹26,000 — an annual increase of nearly 12%.
However, that cushion is weakening.
“Previously, we have seen price increases being offset by no-cost installments, making it easier for buyers to afford more expensive devices. But now, even the cost of minimum monthly payments are rising, which is making buyers consider refurbished phones at lower prices, or even repairs. The ones that will pay the price would be the brands and some of the largest retailers across the industry,” added Tarun Pathak, director of research at Counterpoint India.
IDC’s Singh noted that the firm had projected flat annual revenue growth for 2026 — but that forecast did not fully factor in war-related uncertainty and its impact on global commodity and component pricing.
“For now, beyond the first quarter, a lot would depend on how the global financial markets stabilize, and if that brings parity back to the industry.”
Adding to the strain, memory chips — a core smartphone component — more than doubled in price in the final quarter of 2025 due to a global supply crunch. Analysts now expect prices to largely sustain at elevated levels.
“Memory chip costs will come down, but it’s unlikely that the entire price spike will be reversed. As sales for brands slow down, so will their orders to contract manufacturers. This looks like a possibility at this moment, even though a long-term resolution to the Iran war, which all industries and nations are hopeful of at this moment, could be a silver lining for reversing consumer sentiment and shipping disruptions,” said Harshit Kapadia, vice-president at brokerage firm, Elara Capital.
Manufacturer impact
Electronics manufacturers are already bracing for the fallout.
On 30 March, in an interview with Mint, Sunil Vachani, cofounder and executive chairman of Dixon Technologies, acknowledged that demand from brands could soften as smartphone sales weaken.
In the December quarter, Dixon reported a 28% sequential drop in revenue due to declining orders — an early signal of the slowdown’s ripple effects.
Dixon, India’s largest listed electronics manufacturer, counts Vivo, Motorola and Xiaomi among its clients.
For now, manufacturers and brands alike remain in wait-and-watch mode, hoping for stabilization in commodity prices and global markets before demand normalizes.