India’s smartphone market shipments are set to hit a record high of 173 million units in 2021 at 14% YoY growth, according to Counterpoint Research’s India handset quarterly outlook. More than 100 million smartphones are expected to be shipped in H2 2021. The market has been experiencing strong consumer demand after the lifting of COVID-19 restrictions in June. The strong sales momentum will continue during the festive season from August to November.
The market has been experiencing a steady growth curve over the last five years to reach 158 million units in 2019. COVID-19 saw the market experiencing only a minor dip of 4% in 2020, showcasing its resilience as well as the emergence of smartphones in a more important role to cater to the pandemic-triggered need for digital communication and newer use cases. Even as the second COVID-19 wave hit the country in Q2 2021, the smartphone market bounced back faster than expected and registered its highest ever shipments in H1 2021.
As the number of COVID-19 cases remains under control and the vaccination program continues, the economy will bounce back and raise consumer confidence. The pent-up demand will also play a role, although its impact will be limited compared to last year as COVID-19 lockdowns were shorter this time around. The biggest factor pushing the market could be the launch of Reliance Jio’s low-cost Android phone JioPhone Next in September, which will enable migration of feature phone users to smartphones.
JioPhone Next to trigger feature phone-to-smartphone migration
India’s smartphone market opportunity is far bigger than what it seems to be. The country has a considerable installed base of 320 million feature phone users. Getting these feature phone users is the key to realizing the full potential of India’s smartphone opportunity. The JioPhone Next phone is expected to be priced below $75, a price point that hasn’t seen major activity in the last two years. If it works as expected, we might see the Indian market entering a period of hyper-growth.
5G smartphones to grow 8X in 2021
In 2020, 5G smartphones accounted for less than 3% of the market. But in 2021, the market for 5G devices will grow over eight times to reach 32 million units and make up 19% of the overall smartphone market. Intense competition among OEMs, availability of cheaper 5G chipsets and declining prices of 5G devices will lead to more 5G devices being pushed into the market. The average price of entry-level 5G devices has come down by 40% in the last 12 months. The cheapest phone with 5G now costs less than INR 15,000 (around $200). Preference for 5G devices is also high in India, with 21% of consumers claiming it is one of their top three priorities while purchasing their next phone.
Long-term outlook remains positive
India’s smartphone market is the second biggest market in the world after China. In 2020, the Indian market outperformed the North America, Latin America and Africa markets. Our outlook for India for the next five years remains positive, keeping in mind its 1.39-billion (and growing) population, upgrade of users from feature phone to smartphone, and future emergence of new use cases. The market is set to cross the 200-million mark in the next couple of years.