What the Economy Reveals Through the Indian Smartphone Market

Clouds are hanging over the Indian smartphone market despite Apple’s optimism about India being the next big growth area. Apple, which recently opened its first two stores in India, has seen an increase in market share, but cheaper rivals are struggling to sell phones. According to the International Data Corporation (IDC), India experienced a lower first quarter shipment of smartphones in four years, with 31 million smartphones shipped, marking a 16% decrease from the same period in 2020. IDC states that the weak demand has been driven by high mobile phone stockpiles as well as an uncertain economic outlook.

India’s overall smartphone market has experienced its third consecutive quarter of declining sales. Meanwhile, some analysts suggest that a “premiumisation” trend is emerging as wealthier consumers upgrade to more expensive products. According to Prachir Singh, there has been an almost doubling of the share in the premium segment in the first three months of this year compared to a year ago. Brands like Apple and Samsung are benefiting from this trend, while demand for cheap mobile phones made by companies like Xiaomi and Realme is waning as consumers take a longer time to upgrade their phones, particularly in a tough economic environment.

The contrast between Apple’s fortunes and the shrinking market for cheaper devices reflects the uneven post-pandemic recovery in Asia’s third-largest economy, especially for the population in the lower half of the income pyramid. India Ratings and Surveys suggest ongoing problems in the rural economy and extreme weather is driving the decline in consumer goods sales. This is affecting household spending on goods and services and is up 20% year-on-year, with Indian consumers weighed down by rising interest rates and stubbornly high inflation. Sales of entry-level scooters this April were down almost 20% compared to the same month in 2019, before the pandemic hit.

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