What does 2023 hold for India's smartphone market?

India’s smartphone market is set to contract 5% in 2022 to 160 million units—the second time since 2020 when the pandemic and lockdowns impacted sales. Why has the market contracted this year and what’s in store in 2023? Mint explains.

Why isn’t the Indian smartphone market growing? 

2022 began with supply-chain issues. There were component shortages, including that of semiconductor chips, whose prices rose. This, in turn, led to an increase in the prices of smartphones by about 15%. Mint had earlier reported that prices could rise about 30% due to additional pressures arising out of inflationary macroeconomic environment. The price increase led to demand waning among consumers, especially in the entry and mid-level price bands. The premium market, however, grew. According to a senior telecom industry executive, the replacement cycle for smartphones has increased to nearly 30 months now versus 18 months till last year.

What’s the shipment outlook for 2023?

Analysts expect 2023 to be better than 2022 with 175 million units expected to be shipped. A number of factors can contribute to this uptrend. One, the inflationary macro environment is likely to improve, which may lead to the softening of input costs and, in turn, stablize the retail prices for smartphones. India’s retail inflation has started to come down, which could permit consumers to spend more on electronic devices. Two, feature phone users are expected to migrate to smartphones. Three, with 5G networks now being available, many consumers will replace their 4G smartphones in 2023 as well as in the years that follow.

What can scuttle shipments again?

India has a high installed base of more than 600 million smartphone users. So, replacement cycles will help broaden the market size in the coming years. Despite the dip in 2022, India’s smartphone market has been resilient and performed better than many other regions, said analysts. The biggest worry for the industry is now the covid surge in China and the scale of its impact on electronics supply chains.

Read the full story on Mint.