Mobile Phone market : How Chinese mobile phones took over the Indian market: Local smartphone industry witnesses a boom with Make in India: India’s Mobile Market Rises to the 2nd Largest In The World: Effects of the Growth of India’s Mobile Market

1. Report on smartphone industry and their effects on Indian market
Introduction
Report is about the market size of the smartphone industry in India and how the threat of new
entrants in this industry is increasing rapidly. Reveals how the organized players are trying to
make a strong foothold by making a strong distribution channel in India. People prefer changing
their phones with the new features coming rapidly. Report is about the current market size of the
smartphone industry and reach. E-Commerce players have emerged as strong distribution
channel for smart devices, especially smartphones in India. The featured phone still is covering a
major part of the mobile phone market as compared to that of Smartphones. The decreasing
prices of smartphones, and the EMI option available in smartphones, are driving the smartphone
market in India.
India's mobile phone market proves a fierce battleground for manufacturers
Samsung was the biggest selling brand with a 29 per cent share of the Indian market by
shipments in the second quarter of 2018, according to Counterpoint’s research. But Xiaomi was
almost at par with a 28 per cent share, and in the previous two quarters, it overtook Samsung to
be the top brand by shipments.
Figures from Canalys, meanwhile, show Xiaomi and Samsung, both attaining a 30 per cent share
of the market each in the second quarter. Xiaomi achieved a 106 per cent growth over the same
quarter last year, just fractionally ahead of Samsung to hold the top position.
“India has a voluminous smartphone market,” says Dushyant Jani, the founder and chief
executive of Mobclixs Technologies, a digital media company based in Mumbai. “Manufacturers
are well aware that the wants and desires of Indian customers will have a significant impact on
sales. The progress of the online market has also strongly affected the smartphone industry.”
Xiaomi only entered India four years ago, and started out selling its devices online. The brand’s
expansion has been rapid and the company now has six smartphone manufacturing plants and
more than 1,000 service centres in the country.
“Xiaomi never relied on traditional advertising methods like most other brands in India,” says
Manu Jain, the vice president of Xiaomi and managing director in India. “India is a truly diverse
consumer market, with so many different communities and socio-cultural practices which
influence consumer habits and trends,” says Mr Jain. “India has the largest millennial consumer
segment who is the most smartphone friendly of the lot, and willing to experiment with smart
technology.”

2. Meanwhile, China’s OnePlus surpassed Samsung and Apple to become the biggest selling phone
brand in the premium segment in the second quarter of 2018, grabbing 40 per cent of the market
share, according to Counterpoint, a global industry analysis company.
India is the world’s second-largest smartphone market after China, overtaking the United States
last year, according to research company Canalys based in Singapore. There is an enormous
opportunity for mobile phone brands to tap into Asia’s third largest economy, with its more than
1.3 billion people, a young demographic and rising incomes.
“India is a land of opportunity for most brands and as the world’s fastest growing smartphone
market, it is a focus market for us,” says Vikas Agarwal, the general manager at OnePlus India.
“In India, strategy is key and doing the right thing at the right time can take you a long way.”
Social media has been a major part of this strategy and India accounted for over one-third of
OnePlus’ global business last year.
The country’s smartphone market expanded by 14 per cent last year over the previous year, with
total shipments of 124 million units to mobile phone vendors, making it the fastest growing of
the 20 biggest smartphone markets globally, according to International Data Corporation.
Half of India’s mobile phone users still have basic feature phones, but they are rapidly upgrading
to more high-tech devices.
It is an opportunity that mobile phone brands do not want to miss. But the Indian market is a
tough one to crack. Apple, for example, does not make it into the top five mobile companies in
terms of market share for the quarter, according to Counterpoint.

3. By contrast, more unlikely players such as Vivo, OnePlus, and Xiaomi – all Chinese companies
– have managed to hit the rights buttons in India.
Vivo and Oppo’s marketing strategy has been to invest in cricket sponsorship in India, where the
sport is often described as “a religion” and is watched by hundreds of millions of Indians via
television from the biggest cities to the remote villages. Last year,
Oppo took over the sponsorship of the Indian cricket team, while Vivo is the title sponsor of the
Indian Premier League cricket tournament.
A factor that hugely influences which phone Indian consumers opt for is cost. Whether it is to
buy a high-end or budget phone, they always want to get value for money, analysts and shop
owners say.
“India is a cost-conscious economy, where affordable products sell the highest,” says Mr Jani.
“From local brands like Micromax to Karbonn, to foreign brands like Samsung and HTC, budget
smartphones have flooded the market.”
Giant global brands are facing stiff competition in India in the premium segment, too, and
mobile manufacturers are increasingly looking to corner this end in addition to the mass budget
market.
“The premium market demand is being skewed towards sub-40,000 rupee devices due to
aggressive offering such as OnePlus through online segments,” analysts at Counterpoint wrote in
a report.
“This is a new trend where ‘affordable ultra-premium’ is wooing aspiring rich and young
consumers away from more expensive offerings from likes of Samsung and Apple. With the
likes of Oppo, Huawei, Vivo and Google looking to be aggressive in 40,000 to 60,000 rupee
segment in coming quarters, pressure on likes of Apple and Samsung will be even higher.”
Bumper sales for OnePlus in the country in the second quarter were driven by the launch of its
latest flagship device, the OnePlus 6 – with its high-tech spec priced at less than half the cost of
the iPhone X. The company launched its first phone in India at the end of 2014, only sold online
through Amazon.in. Its management says a lot of work has gone into wooing the Indian
consumer.
“If you want to succeed as a brand in India, you must truly understand the needs of the Indian
market,” says Mr Agarwal. The Indian customer, for example, is very “experience based” and he
says that has prompted the online-focused brand to open stores.
“We realised we would require some tweaks in our model,” says Mr Agarwal. “For India alone,
we then set up a large-scale experience store in Bangalore as an additional offline touchpoint for

4. our customer to engage with the brand. We are now setting up over 14 new offline touch points
in key markets across the country.”
After-sales service is something that is very important for the Indian customer, and consequently
the company plans to set up “large-scale state-of-the-art service centres” in major cities, he says.
Social media is key for OnePlus – as is the Indian film industry. “We maintain constant
engagement with our fans through Facebook, Twitter and WhatsApp for their feedback,” says
Mr Agarwal.
“Thus, instead of using one ambassador across the Indian market, OnePlus engages with its core
fan community through various influencers that appeal to divergent demographic groups across
different geographies.
“For example, while [actor] Amitabh Bachchan’s endorsement worked for a certain category of
consumers in urban and rural markets, comedian Vir Das helped us reach the urban young.”
Analysts say India is a fickle market, though. When it comes to mobile phones, a quarter or a
year of success does not guarantee that a company can hold on to its market share.
“It’s a fight every day,” says N Chandramouli, the chief executive of TRA Research, a
consultancy based in Mumbai. “The Indian market for phones is extremely complex, extremely
competitive.”

5. How Chinese mobile phones took over the Indian market
Home-grown smartphone brands like Micromax and Intex once cornered 54% of market share.
That is down to less than 10% today.
Four years ago, Micromax’s office in Gurugram was at par with the likes of Google. The multi-
storeyed building had open spaces, rooms aplenty, and even balconies and terraces where parties
could be thrown.
Today, the company operates out of a single floor in a common office complex in Gurugram.
The once-swanky office now has only a few cabins, far fewer employees, and is quite cramped.
Incidentally, in 2014, Counterpoint Research put Micromax at the helm of the booming Indian
smartphone market. It even surpassed Samsung, and shipped more phones than any other brand
in India. In fact, home-grown smartphone brands such as Micromax, Lava, and Intex once
cornered nearly 54% of the market share. The same brands have a less than 10% market share
today. What really happened?
A look back at the last few years shows home-grown smartphone brands losing their dominance
to a gradual Chinese onslaught. Today, the top player in India is Xiaomi, accounting for 29.7%
of all smartphone shipments (IDC data). The company—which introduced itself with
competitively priced devices—has slowly built its base in the country over the past five years,
and is now reaping the benefits.
In fact, according to data from IDC, four of the top five smartphone brands in India are from
China—Xiaomi, Vivo, Oppo and Transsion hold the 1st, 3rd, 4th and 5th positions, respectively.
Samsung, which ousted Nokia from the Indian market, remains at number two, but is feeling the
heat as well.
Meanwhile, Intex (which did not offer comment for this story) and Micromax have both been
selling consumer appliances. Micromax says it sells nearly a million TVs every year, while
Intex’s website proudly declares itself to be the number one Indian LED TV brand. Intex has
also dabbled with air-conditioners and speakers.

6. The offline story
Chinese brands have always offered low prices, and they continue to do so. However, the market
has also changed. Now, the low pricing of devices has become the bar that others have to
compete against.
In one of its launch events in China some months ago, Lei Jun, CEO of Xiaomi, had said that if
his company makes more than 5% net profit from its hardware business, it would aim to pass that
benefit on to its customers.

7. According to an industry source closely involved with smartphone sales, Oppo and Vivo sell
phones in India at a margin of about 12%. These two companies have traditionally sold phones at
higher prices than Xiaomi, since they plied their trade in an offline-centric model in India.
In the offline space, companies incur higher overheads, which raise the overall cost of the device,
and hence, the final price too. According to a distributor who requested anonymity, when Oppo
and Vivo started dominating the offline segment, they were paying lots of money to retailers and
distributors to keep their brands visible. Yet, that wouldn’t reflect on the prices of the actual
products. “They would even pay for redecorating a retailer’s store,” the source said.
Oppo and Vivo were not just paying for Indian Premier League (IPL) advertisements and
sponsoring the Indian cricket team, but also paying a lot of money to retailers who would put up
their boards; give their products prime positioning; or sell their devices exclusively. “Xiaomi,
Vivo, and Oppo give targets to distributors that are based on volumes. Instead, a brand like
Samsung gives targets based on value,” said a distributor based in Gurgaon.
This means retailers could make easy money from Chinese brands by showing the number of
devices sold, while a brand like Samsung demands that they sell phones worth a particular
amount. In a market that mostly buys cheaper phones, achieving value targets, like that of
Samsung’s, are more difficult.
Mudit Sethia, who runs smartphone distribution and retail channels in Kishanganj, Bihar, said
that some Chinese brands offer ₹150 per unit sold as an incentive. This could go up to above
₹200 per unit, depending on how expensive the phone in question is.
Furthermore, another source in Gurgaon said some distributors are wholesaling Xiaomi, Vivo
and Oppo’s phones to grey markets at nearly zero margins. This allows them to fulfill the
volume targets that these Chinese brands want, hence earning the incentive they offer on those
sales.
Selling to the grey market doesn’t just allow them to fulfill volumes—it also gives them a much
wider coverage than their current stores and networks can offer.
He also said that distributors who were doing business worth ₹20 lakh per month by selling
Xiaomi’s phones earlier have suddenly seen a sharp increase in business transactions—up to ₹4
crore per month just ahead of the festive season, thanks to this strategy. Another reason for this
sharp increase is because of financing plans, which allow customers to get phones today and pay
for them later.
How it happened
The main reason behind the fall from grace for Indian brands, however, is the failure to gauge a
fundamental shift in the market—when India suddenly moved from 3G to 4G in a matter of
months and Reliance Jio changed the game completely. According to Vikas Jain, co-founder,

8. Micromax Informatics Ltd, Micromax found itself with a huge stock of 3G smartphones across
its supply chain, which it had to get rid of at a time when the market was focusing on 4G devices.
“The total addressable market (TAM) went down,” he said.
His inventory, which was meant for 60-75 days, was extended to 365 days. Singh agrees with
this, saying that the Indian brands “had a lot of commitments” in China for 3G phones, when
Xiaomi and other brands were selling 4G devices.
Jain mentions that this was something that hit all Indian players, and since the market leaders
could not fulfill the consumers’ demand for 4G-enabled devices, a huge gap was left to be filled.
Their Chinese counterparts duly capitalised.
The Chinese firms were already coming from a 4G-dominant market and could bring their 4G-
enabled phones to India. When Reliance Jio forced telecom players to adopt 4G connectivity and
voice-over LTE (VoLTE) calling, Chinese phones were already ready for it.
While these brands also offered better pricing at times, Jain says that it alone cannot be the
differentiator. “If I am able to do that (undercut somebody), then somebody should be able to do
that to me too. Price is not the only mantra,” he added.
An industry veteran who wished to remain anonymous further added that Chinese brands have
been known to even sell phones at a loss, just to gain consumer interest.
Kapal Pansari, director of Rashi Peripherals, one of India’s top five IT distributors, also said that
Chinese firms gamed the distribution ecosystem well, even while treating both offline and online
channels on an equal footing. He said, “Indian players did not manage distribution hygiene
properly and created discontent and mistrust among its distribution stakeholders. Chinese brands,
on the other hand, continued to improve on the channel front with new experiments, and
introduced innovative channel finance models in order to build trust among the involved
partners.”
S.N. Rai, co-founder of Lava, further added that the Chinese brands also had control over the
value-chain of the business – the design and manufacturing side. While Rai claims that Lava also
had control over such aspects of the business in India, the Chinese were more evolved.
Hopes of possible comeback
However, as any disruptor in any industry knows, technological advantages do not last forever
and cash burn is not a long-term strategy. That is why Indian brands have begun to sense the
possibility of a comeback. According to Sethia, the likes of Oppo and Vivo have stopped paying
for putting up their boards, and other such advertising tactics.
Rai from Lava said that distributors have been asking the company for products, “now that Oppo
is struggling.”

9. Sethia currently runs distribution for Tecno, a brand owned by Transsion—the fifth
largest smartphone seller in India by shipment. He previously worked with Oppo and Vivo
devices. He explains that while Xiaomi is the top brand in India, it is still quite weak in terms of
distribution channels.
There are rumours floating around in industry circles that Xiaomi executives had met with
Micromax to buy out its once-strong retail presence, and use that to its advantage.
The concept of “preferred” or “exclusive” retailers is also dying, said Sethia. In this, brands like
Oppo, Vivo and others would prioritise shipments to retailers who chose to sell only their
products, and incentives would also differ.
Lava’s Rai also said, “Today, what we can produce at $1.3 assembly cost, Foxconn can’t
produce at even $2.8, despite having such huge volumes.” He cited increasing costs in China as a
reason, and added that China’s support program for ‘low-value add manufacturing’ is moving
away, because they find it to be hindering their economy.
The company, today, thinks it’s at par with any global manufacturer, and the government’s
Phased Manufacturing Programme, which has a mix of import tariffs and incentives for local
assembly, will help them as well. Besides, while Indian brands have lost their dominance within
India, they are still selling phones in other countries, like Mexico.
Moreover, distributors are beginning to consider other brands as options too, though none of
those who spoke with Mint mentioned Indian brands, specifically, as being under their
consideration.
But the unintended side-effect of the disruption unleashed by Jio, which caused the temporary
downfall of the feature phone, has been the massive expansion in the market itself. Many of the
first-time mobile internet users may get on board via the feature phone—the erstwhile forte of
the likes of Micromax and Lava.
Feature phone is also a segment where Indian brands never really lost their presence completely.
In fact, in December 2017, Micromax claimed it had sold three million handsets under its Bharat
range of cheap smartphones.
The launch of the Jiophone2 and Airtel’s nascent plans to launch its own low-cost device means
telcos may be on the look-out for a number of tie-ups with phone makers.
Micromax’s Jain dreams of a future where the ideal smartphone strategy is not just new product
launches, but tying up with telcos, so that consumers buy a phone and get 4G plans bundled with
it.
“There’s a general belief in Tier III and Tier IV towns that if you’re using a smartphone, your
data gets consumed automatically,” said Jain. He thinks this is why the Jiophone was a

10. subsidised feature phone, instead of a subsidised smartphone. “Slowly and steadily, consumers
started consuming data... And even 1GB becomes too less for an entire month,” he added.
IDC’s Navkendar Singh agrees that Micromax and Lava “still have juice left”, though he also
mentioned that Intex has “almost moved out” of the market. “They’ll have to pick and choose
their battles. Don’t fight Xiaomi in the ₹7,000-₹10,000 range,” said Singh. He suggested that the
right government and telco tie-ups could help.
Micromax recently won a ₹15,00-crore deal from the Chattisgarh government to distribute 50
lakh smartphones —part of an emerging trend in politics where free phones are dangled to win
over youth support.
But merely relying on such populist sops, or possible tie-ups with telcos, isn’t much of a
strategy. Unless Indian phone makers can quickly figure out a way to go down the “relatively
cheap premium route”—a segment OnePlus completely dominates— their hopes of a dramatic
return to the dominance of 2014 may be dangling by a very tenuous thread.
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.

11. 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.

12. 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.
Local smartphone industry witnesses a boom with Make in India
Electronic Systems is among the 25 sectors covered under the ‘Make in India’
campaign. The impact is clearly visible in the recent trends observed in the
smartphone industry, which is witnessing an interesting shift towards the local-
made phones at higher price points.
The ‘Make in India’ campaign continued to promote local manufacturing as more
than 25 vendors are now manufacturing smartphones locally in India. More than
two-thirds of the smartphones shipped in Q1 2016 (April – June 2015) were
assembled within the country. A few vendors, who are currently assembling
mobile phones in India, are likely to start manufacturing components like batteries,
chargers and data cables owing to encouraging support from central and state
governments. India is looked at as a key market for smartphones as it has a low
penetration (less than 20 percent) and owing to the anticipated growth in demand,
India is slated to be one of the biggest markets for smartphones.
A recent report published by market research firm CyberMedia Research (CMR)
revealed that “made in India” handsets contributed 67 percent to total sales. India
shipped a total of 52.8 million handsets, which is a 4 percent decline compared to
the number of handsets shipped in the same quarter last year. The contribution of
“India brands” was up by seven percent - an all-time high of 45 percent.
Interestingly, there was a subsequent dip in contribution by international

13. brands. CMR includes 'Make in India' brands as all domestic brands
and Samsung's domestic production.
Mobile phone production in India has crossed 100 million from 68 million in 2014
with leading companies setting up their manufacturing base in the country. Many
brands have pitched in like LG has announced its new ‘K’ series to be the first in
its portfolio to be manufactured in India. The LG K7 has been launched for Rs
9,500, while the LG K10 has been launched for Rs 13,500.
Gionee is going model by model and has already started assembling P103 and S+
smartphone models in India and plans to manufacture all Gionee devices in the
country very soon. Samsung, the country's largest phone seller, which has been
manufacturing in India since 2006, has added its capacity at its plant in Noida and
is looking for opening a new plant.
Micromax, India's second-largest phone maker, has started a plant at Rudrapur in
Uttarakhand and is planning investments in Telangana, Rajasthan, and
Maharashtra. Lava has so far invested Rs 50 crore to build a facility in Noida to

14. assemble one million units a month. A second unit, with an investment of Rs 1,200
crore and a capacity of 10 million units a month, is on the drawing board. Karbonn
is investing Rs 200 crore in two plants, one in Noida and another in Bengaluru and
many more.
According to Faisal Kawoosa, lead analyst with CMR's Telecom Practice, an
interesting shift has been observed in the market in the Rs 10,000-Rs 15,000
bracket which contributed the maximum (22 percent) towards the smartphone
shipments. Usually, the price bracket of Rs 6,000-Rs 8,000 used to be the prime
contributor. This increase has been primarily due to introduction of shipments by
Chinese smartphone maker Leco and launch of new handsets from Lenovo, Oppo,
LG, Panasonic, Micromax, Intex, LYF (RJio), and Vivo in Rs 10,000-Rs 15,000
price bands.
The report also points out that the average selling prices for smartphones in India
have gone up. While in the first quarter of 2015, the average selling price for a
smartphone was Rs 10,364, in the first quarter of 2016, it was Rs 12,983. This
suggests that Indians are now spending more on smartphones, and what was
defined as a budget smartphone till now, isn’t really the case anymore.
The Make in India campaign is crafting a manufacturing core in the nation which
is the first step to enhancing the contribution of the manufacturing sector towards
the GDP. With Make in India being a buzzword around the world, we can expect
more and more investments in Indian market to boost the economy and growth in
all the 25 sectors covered under the campaign.
India’s Mobile Market Rises to the 2nd Largest In The World
As far as the mobile market is concerned, India has proven to be a giant in the
sector, as both a producer and a consumer. With 1.3 billion people spread across a
vast and structurally diverse geographical area, the country can draw upon an
immense pool of human resources and potential customers.
Since 2016 (when the nation was home to 20% of all mobile phone subscribers on
the planet), India has had the fastest-growing smartphone market in the world. 27.5
million devices were sold there in the second quarter of 2016, and market

15. projections from the Ericsson Mobility Report suggest that the number of mobile
subscriptions in India will reach 1.4 billion by 2021.
Reports from February of 2015 confirmed that India’s mobile market had already
overtaken the USA, establishing itself as the second largest in the world, behind
China in the top spot. Data made availableby market research firm IHS, China’s
National Bureau of Statistics, and the Vietnam General Statistics Office showed an
increase in annual production of mobile phones in India from 3 million units in
2014 to 11 million units in 2017.
The quick and widespread adoption of smartphones in India led to something of a
demand-supply deficit which could only be met through increased importation, or
a ramping up of the country’s manufacturing infrastructure. With market analysis
suggesting that India’s mobile market growth in demand could be five times faster
than the world’s largest smartphone consumer, manufacturers from China such as
Xiaomi and Huawei have been investing heavily in the mobile market for India.
Production in India itself went into overdrive to meet this challenge, and in 2017,
India overtook Vietnam as the world’s second largest producer of mobile phones.
As a result of this, imports of mobile devices into the country fell to less than 50%
of their former level, in the period between 2017 and 2018.
This dramatic rise in production has come about as the result of a combined effort
involving the government of India, the Indian Cellular Association (ICA), and the
Fast Track Task Force (FTTF), a new body set up by India’s Ministry of
Electronics and IT to speed up and co-ordinate development in the mobile market.
The FTTF has set India the target of producing 500 million mobile phones locally
by 2019, at an estimated value of around $46 billion. From this level of
manufacture, the FTTF intends to export at least 120 million units (around $1.5
billion worth). The Fast Track Task Force has also set its sights on establishing a
component manufacturing sector of $8 billion, and the creation of 1.5 million
direct and indirect jobs in the mobile market by 2019.
Effects of the Growth of India’s Mobile Market
Within India’s mobile market, the desire for high-end smartphones has resulted in
a steady decline in sales of lower specification handsets.

16. Smartphones are now the primary point of entry for mobile users in India – and
also the first point of contact with the internet, for many consumers. It’s estimated
that over half of India’s internet users get access via mobile devices (as opposed to
desktop computers or laptops), and almost 60% of Indian users access the internet
for the first time on their mobile phones.
For users of all generations, apps are fast becoming an essential part of daily life.
58% of smartphone users in India believe that mobile apps truly benefit their lives,
while 77% of them have up to 30 different apps on their smartphone.
Despite this, revenues for app store content are only running at 15% of their
estimated potential. A lack of access to formal banking systems and credit/debit
cards is to blame.
Of its 1.3 billion citizens, India currently has only 19 million credit card users. To
combat this trend, policy decisions have been made to lower the minimum price
that may be charged for purchases in the app stores and to scale down app store
prices in general. It’s hoped that this will bring mobile software down to within a
range affordable by more of India’s lower-income consumers.
For mobile subscription plans, direct carrier billing or DCB has been proposed as
the option most likely to disrupt the mobile market in India. This payment method
doesn’t require subscribers to jump through so many hoops of security and
bureaucracy as traditional payment card options and is expected to provide the
97% of users in India without a card payment option to gain access to the app
stores.
India’s Mobile Market and the Benefits for the Global Economy
A 2015 study from the Boston Consulting Group pegged the annual value of
mobile gross domestic product, or mGDP at a combined figure of over $1.2
trillion, for the six countries surveyed. This sum was derived from spending on
mobile devices, mobile connectivity, and mobile commerce in Brazil, China,
Germany, South Korea, the United States, and India.
With India’s increased production capacity and reduced reliance on importing
smartphones, the emphasis for trading partners and external suppliers from the

17. global economy has shifted toward servicing the infrastructure and software
environment needs of the mobile market in India.
Due to its multi-part ecosystem (lots of different operating system versions, and a
vast range of hardware), Android is currently the dominant force in India’s mobile
landscape. Low-cost, entry-level smartphones like the Android One (introduced at
a sixth the price of the iPhone 6) have helped Android to over 90% of mobile
market share. But Apple has outlined plans for increasing their stake in the Indian
market, citing direct carrier billing and the launch of Apple Pay as first moves.
A government-backed program known as the Aadhaar initiative has been reaping
dividends for Korean mobile manufacturer Samsung, which is the first major name
to buy into the scheme. The Aadhaar initiative assigns a unique identification
number to every registered citizen of India and works from a biometric database of
fingerprint and iris scans.
Users of Aadhaar-approved cellphones will be able to gain easier access to
government services, subsidies, health care, and education, and have the option to
open bank accounts or mobile subscription plans, remotely. And Samsung is the
only company with an Aadhaar-approved device currently on the market.
The Unique Identification Authority of India (UIDAI), the body overseeing the
Aadhaar initiative, has met with representatives from Google, Microsoft, Samsung,
and the Indian smartphone maker Micromax, to discuss the issue of developing
Aadhaar-compliant devices.
Gaming represents another window of opportunity for investors and developers in
the Indian mobile market. Recent studies suggest that the mobile gaming sector in
India is expected to reach $3 billion by 2019. It’s also reckoned that, of the 20 apps
downloaded by smartphone users within the first month of purchase, five of them
are games.
This level of interest is expected to increase, with mobile gaming accounting for a
large proportion of the growth in India’s market for mobile commerce to its
anticipated value of $19 billion by 2019.

18. And the Future?
Network access and connectivity are the major obstacles to be overcome, in the
next phase of expansion in the mobile market of India.
Though fixed broadband speeds for internet access have seen an improvement in
recent years, India has the slowest 4G LTE speeds in the world. As of 2016, less
than 1% of India’s population had access to a 4G network – at a time when other
nations like China are looking to the next generation of 5G.
So we can expect technological development and financial investment efforts to be
concentrated on this aspect of the mobile market in the future if India is to maintain
its strong position in the global economy.