IBEF Blog

INDIA ADDA – PERSPECTIVES ON INDIA

Author

IBEF

Knowledge Centre

IBEF

Category


IBEF Videos

Indian Edge: Boosting the Services Economy

Oct 17, 2017 16:41
Sangeeta Godbole, Director General, Services Export Promotion Council

Indian Edge: Boosting the Services Economy


Indian Edge: Think Leather, Think India


Indian Edge: Engineering excellence



Social Bytes




Authors


Consumer Markets

Go Back

Current Standing and Growth Potential of India’s Handset Market

IBEF, Knowledge Centre

Jan 11, 2018 17:05

Smartphones have been taking the world by storm. Look at the mobile phone advertisements and you will know what we are talking about. While earlier mobile phone advertisements talked only about the product, these days they paint a picture of society. Younger people taunting technologically-challenged older people for not using smartphones, People finding directions on Google Maps instead of asking people…that is how powerful smartphones are today. They have changed the face of society and given a new definition to social status.

This situation is even more widespread in India, which is the fastest-growing smartphone market in the world. India reportedly accounts for nearly 30 million smartphone purchases every quarter, and this percentage keeps increasing several times a year. According to IDC and the Ericsson Mobility Report, mobile subscriptions in India are expected to rise to 1.4 billion by 2021.

India has a voluminous smartphone market, and this is one of the reasons why leading smartphone makers like Apple and Samsung consider the Eastern market when incorporating changes and new features in their devices. Since India is a huge market for smartphones, manufacturers are aware that the wants and desires of Indian customers will have a significant impact on sales.

That isn’t all. India is also the second-largest telecommunications market in the world (after China), with over 1.05 billion subscribers. The mobile phone market in India has grown exponentially in the past decade, and with the emergence of smartphones, the growth has increased substantially. The Indian economy is also affected by smartphone sales, with the smartphone market accounting for a significant portion of the GDP. India is also the fourth largest economy in terms of usage of mobile applications.

The strong and rapid growth of the smartphone market has been made possible by several liberal policies of the Indian government, along with huge consumer demand. The telecom industry today is among the top five employment opportunity generators in India, creating over four million direct and indirect jobs over the next few years, according to data released by Randstad India. Increase in smartphone sales and internet usage along with the government’s efforts to increase the penetration of technology in rural regions have made this possible. The IDC also predicts India to overtake the US smartphone market in a few years time.

A lot of factors have contributed to the rapid growth of the Indian smartphone market, but the two most important ones are the low cost of phones and their short shelf life. India is a cost-conscious economy, where affordable products sell the highest. Not surprisingly, the sub-10,000 segment of smartphones has seen the highest sales since 2012. Every smartphone maker wants to capitalize on the demand for budget devices with sub-10,000 offerings. From local brands like Micromax to Karbonn to foreign brands like Samsung and HTC, budget smartphones have flooded the market.

The growth of the online market has also strongly affected the smartphone industry. The greatest example is Chinese handset maker Xiaomi, an online brand whose shipments to India grew by 290 per cent in the third quarter of 2017. While Samsung shipped 9.4 million units, Xiaomi shipped 9.2 million, reducing the gap between the market shares of the two brands. Market analysts believe that that Xiaomi could well overtake Samsung in India.

The primary reason for the success of Xiaomi is the low-end phones packed with incredible features. Indian customers always look for a good bargain, so the same features that Samsung offers at the 20,000 – 30,000 range are offered by Xiaomi at the sub-15,000 segment.

Where online brands are concerned, customers are always in for huge discounts and deals. There are festive offers, inaugural offers, end-of-season sale, and low-cost EMIs that enable even the lower middle class to own a smartphone. Services necessary services have rolled out smartphone apps, driving people to learn more about the technology in order to be able to use certain services. The convenience offered by app cabs and food delivery apps are also major drivers among the educated middle class for getting smartphones.

While there are more takers for the budget smartphones, big brands like Apple isn’t too far behind either. Apple has witnessed a slowdown in global sales of the iPhone since the past year, and this has led CEO Tim Cook to focus on India, where it has less than 1 per cent of market share. Even though it’s a tough market for Apple, with local and Chinese brands galore, India certainly forms an important market for the brand. Apple has begun local production in India in early 2017, and saw 900,000 iPhone shipments in the third quarter.

With 4G services entering the Indian market, smartphone sales are expected to be at an all-time high. By 2025, India will have 700 million internet users, with the telecom market touching Rs. 10 trillion. The India government has been playing a vital role in making the country tech-savvy. Some of the policies planed by the government include providing WiFi to 550,000 villages by March 2019 and setting up a 5G India 2020 Forum for the early deployment of 5G in India.

The smartphone market in India is strong enough to ensure a healthy competition among new, upcoming, and existing brands. There are over 100 mobile phone brands in India right now, and new ones are coming up every quarter. A number of factors will ensure the market remains on an upward curve, including low smartphone penetration, ease of foreign investment in India, and the ascendency of Long-Term Evolution (LTE).

The Indian smartphone industry looks fertile, with new brands entering the market and making space with the existing ones. With budget phones a big hit with the educated middle class, more and more brands are jostling for space in the segment. At the same time, more expensive models are also gaining popularity. Market researchers predict that it isn’t too difficult for India to become the leading handset market in the years to come.

Share

POST COMMENT