India Shifts Towards Expensive Smartphones, Market Stabilised With 2% YoY Decline In 2023

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The Indian smartphone market is expected to grow by 5% for 2024, driven by 5G adoption and device upgrades.

India’s smartphone market experienced a slight 2% year-on-year (YoY) decrease in shipments, totaling 148.6 million units, in 2023. The decline was less severe than the expected 6% fall. The stabilisation was attributed to effective vendor inventory management, the introduction of affordable 5G models, and an improving consumer environment in the latter part of the year. 

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The Indian market saw a shift towards more expensive smartphones, with a decrease in the market share of the sub-US$100 and US$100 to US$199 segments by 2% and 12%, respectively. Despite the ‘premiumisation’ trend, vendors faced rising bill of materials (BOM) costs and higher subsidies on retail channels.

5G shipments in India increased by 65% YoY in 2023, driven by budget-friendly 5G models. The US$100 to US$199 price segment saw a 168% growth in Q4 2023, with brands like Xiaomi, Samsung, and realme performing well. Apple achieved its highest shipment levels ever in Q4 2023, with a 50% YoY growth, shipping nearly 3.0 million iPhones. The above-US$500 segment grew 33% YoY in Q4 2023, with Apple capturing a 75% share.

After initial challenges with slow shipments and unpredictable demand, the retail channels recovered through strategies such as clearing old stock, introducing new inventory, improving retail margins, consistent discounts, targeted promotions, additional sales promoters, and enhanced brand engagement.

The Indian government’s reduction of import duties on select components is expected to have minimal impact on overall BOM costs and is unlikely to significantly lower device  average selling prices (ASPs). Vendors face challenges in stimulating market demand beyond the current replacement cycle, with the transition from feature phones to smartphones hindered by macroeconomic challenges and the appeal of the unorganised refurbished market.

The ultra-low-end segment, priced below US$120, is crucial but vulnerable to macroeconomic conditions. The promotion of ‘under Rs.10,000 (US$120) 5G smartphones’ is seen more as a marketing tactic, with limited value to consumers in this segment.

Canalys forecasts a 5% growth in the Indian smartphone market for 2024, driven by 5G adoption and device upgrades. Vendors are advised to focus on securing retail margins, optimising product portfolios, expanding IoT ecosystems, and strengthening retail networks for sustainable growth.

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