Smartphone Sales in India Decline: Inflation And Rising Component Costs Impact Growth

According to Chairman of the India Cellular & Electronics Association (ICEA), Pankaj Mohindroo, the smartphone industry in India is expected to see a 5-7% decline in volumes in this fiscal year ending in March 2027 due to inflationary pressures and global economic uncertainty. However, the industry is still expected to register 8-10% value growth due to higher product prices. 

In an exclusive interview with ANI, Mohindroo said, “Domestic volume demand has remained at the same level for the last five years. This year, we will see a drop of about 5-7 per cent in volume. In value, we will grow because of the higher cost of product. From last year, value growth should be between 8-10 per cent.” 

He attributed the rise in smartphone prices primarily to higher memory chip costs and global supply-chain disruptions driven by the artificial intelligence (AI) boom. 

“The biggest challenge today in the supply chain is the memory. Because of the AI boom in the world, memory supply has become short, and prices have gone up very substantially, which is impacting the final bill of material,” he said. 

According to Mohindroo, rising component costs have sharply increased prices of entry-level smartphones, making financing increasingly important for first-time users. 

“What was Rs 4,000-5,000 a few years back is now Rs 10,000-15,000. So, the gap for the first-time user transitioning from a feature phone to a smartphone has become much larger. That makes financing very essential,” he said. 

He also commented on the Reserve Bank of India’s proposed draft framework, allowing lenders to disable certain smartphone services in case of loan defaults, which could help revive financing in smaller towns and the entry-level segment. 

“It is consent-based. If there is a default, you would be deprived of some services, and if you are making good the default, then there is an immediate recourse which the lender has to implement within one hour,” he said. 

Highlighting the importance of smartphones for financial inclusion, Mohindroo said India still has nearly 500 million people without smartphones despite rapid expansion of digital public infrastructure. 

“Our smartphone population is around 750 million, while the country’s population is about 1.5 billion. Around 500 million people who should have smartphones still do not have smartphones. They cannot do UPI, and they are in digital darkness,” he said. 

Calling the Unified Payments Interface (UPI) “the eighth wonder of the world”, he said smartphones are central to internet access and digital transactions. 

On manufacturing, Mohindroo said India has emerged as the world’s second-largest smartphone manufacturer with production valued at nearly USD 70 billion. 

“Mobile phone exports have gone up 160 times and are now over Rs 2.5 lakh crore. This year, India will become the second-largest exporter of mobile phones and overtake Vietnam,” he said. 

He added that India’s mobile phone manufacturing ecosystem has expanded from around Rs 18,000 crore to over Rs 6 lakh crore in recent years. 

On semiconductors, Mohindroo said India has “finally broken ground” with 12 semiconductor units currently under development and is also focusing on chip design and manpower development. 

He further said the industry is working towards developing Indian-owned smartphone brands and domestic supply chains within the next one to five years.  

(ANI) 

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