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| What does India's smartphone market say about the country's economy |
Computer and smartphone maker Apple on the one hand calls India its new biggest market and a major growth center for the future, but on the other hand, the state of the smartphone market in India is not very good.
Smartphone industry data shows that handset sales in the country have fallen to the lowest level since 2019.
This comes as Apple boss Tim Cook has said of India that the country is at a 'tipping point' in terms of its growing middle class, meaning it is set to grow rapidly.
Apple opened its first two stores in India last month and its market share has also increased – unlike Apple's rivals selling cheap phones, which have not been able to sell their phones in large numbers.
According to research firm International Data Corporation, 31 million smartphones were sold in India during the first three months of this year.
If this data is compared to the first quarter of 2022, it is 16% less. Not only this, but it was the lowest sales of any quarter in the last four years.
IDC says the slowdown in sales comes at a time when economic uncertainty continues around the world and handsets are also in high demand.
The research firm also said that India's overall smartphone market will be flat this year, meaning there will be no significant change. This will happen after three consecutive quarters of declining sales.
Meanwhile, some analysts have pointed to a growing trend of 'premiumization', which means that wealthier consumers are buying more expensive products.
According to Prachir Singh of technology market research firm Counterpoint, the share of the 'premium' segment has almost doubled in the first three months of this year compared to a year ago.
But while companies like Apple and Samsung are cashing in on the trend, demand for cheap handsets from Chinese companies like Xiaomi and Realme has been dampened by economic uncertainty.
Experts say that this segment of the market, namely the cheap handset segment, is suffering as consumers take longer to upgrade their handsets.
But the contrast between Apple's growing sales and the shrinking market for cheap devices also reflects the uneven post-Covid recovery in Asia's third-largest economy.
Ratings and Research Institute of India say the 'K-shaped' recovery in the market is not allowing consumer demand to increase. Nor is it helping to raise wages, especially for the lower-income segment of the population.
On the one hand, there has been a clear increase in the demand for high-end automobiles, mobile phones, and other luxury items, while on the other hand, the demand for consumer goods is still low.
For instance, sales of entry-level or cheap scooters declined in April this year, down about 20 percent from pre-Covid 2019.
According to Manish Raj Singhania, president of the Federation of Automobile Dealers Associations of India, this shows that low-income consumers are 'still reluctant to upgrade'.
It also reflects the ongoing problems in India's rural economy, exacerbated by extreme weather events.
Due to a lack of demand in rural areas, consumption of food items has also decreased, and people are buying fewer snacks and fizzy drinks.
Household goods and spending, which grew by 20 percent in March 2022, have slowed sharply this year. This comes at a time when Indian consumers are reeling under the burden of rising interest rates and high inflation.
According to official data, the growth rate of the country's economy as a whole fell to 4.1 percent for the first three months of 2023, the slowest rate in a year.