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We have come to that time of the year when you take look at the trends of the market and how they shaped the preferences or demands of the customers. The Indian smartphone market in 2022 could summarise the headlines with the long overdue launch of 5G, which has finally made hundreds of 5G phones relevant for the consumer.

It was important that 5G services were launched, otherwise, people were buying the overpriced 5G phones just for the sake of being future-ready, without having any clarity as to when that future will become a reality. This brings us to the main agenda of this piece, prices of phones in India going up, changing the definition of a budget and a mid-range smartphone for the buyer.

The differences became evident the moment you read through the features of a 4G and a 5G phone. It started off as a marketing blitz but eventually, you realised that upgrading the technology came at a price, which the consumer was going to pay. The first signs of this trend came up when multiple analyst reports talked about the increase in the average selling price or ASP of smartphones in India.

India has traditionally been a market where the average cost of buying a phone used to be around Rs 12,000 but this year that has moved closer to Rs 20,000 which is a dramatic increase, especially for a market like ours.

When you look deeper, you realise that a phone which used to cost Rs 12,000 a few years back, is now available for upwards of Rs 18,000 and if people want to experience these features, they invariably spend the extra 5-6 grand to get the value. Brands have been forced to bump up the price owing to multiple reasons, none of which are under its control.

Make In India Effort Optimised

Most smartphones sold in India are made/assembled in the country. But even today, you cannot avoid the reality that the major components used in making a phone come from abroad, which means additional taxes and duties incurred by the manufacturer, which is then passed on to the consumer.

The higher value of the Rupee in the past year or so also helped matters, and then you have the higher cost of using a 5G chipset. Combine all these together and the final recipe shows up in the form of an inflated bill.

More Takers For Premium Phones

But it’s not just the price of the phone that has pushed the market towards a different direction, you also have a broader set of buyers for premium phones, mostly attributed to the growing sales of iPhones in India. The festive offers meant you could pick up older iPhone models like iPhone 12 and 13 for lower than market prices.

And India picked up in lumps, so much so that Apple doesn’t forget to see the gradual growth it is seeing in the country because of these sales. And the effect of iPhones seems to have trickled down to the Android space as well.

Nipun Marya, CEO, iQOO India, recently mentioned that the market for Rs 50-60,000 smartphones in India has exploded in the past 12 to 24 months. Other brands have also noticed a similar pattern, which explains the interest in launching multiple phones in a year. But what could be the possible reason for this change? You could compare this growth with the demand for compact SUV cars in the country.

While the entry-level segment has seen its demand stagnate, SUVs are selling in millions, and it wouldn’t be unfair to say that people are now willing to spend more for a better smartphone, which brings them straight away from a Rs 20,000 device to spending upwards of Rs 50,000 (easy finance schemes come in handy) for their next smartphone.

5G is going to spread wider in 2023 and we might see changing patterns of the consumer in the near future as well.

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