India's smartphone market is expected to witness a growth of 15 per cent to 130 million units this year, accounting for almost half of the total mobile phone sales in the country, according to a report by CyberMedia Research (CMR).
The report said, "Despite 'turbulence' in sentiments towards the end of year, the shipments did not see a proportionate hit as there was very little window for handset makers to realign the shipments through the value chain. However, demonetisation did result in inventory build-up in the range of 25 35 per cent for various brands in different categories of mobile handsets."
It also said, "As a result of this, CMR expects contraction in the shipments for 1Q CY 2017. At the same time, handset makers will try to catalyse sales by offering discounts and schemes immediately after the Union Budget 2017 are announced, which in all probabilities is going to be favouring the handset industry to aid rejuvenation."
The market is estimated to ship 270 million mobile phones in 2017, of which 130 million (48 per cent) are forecast to be smartphones. CMR said it expects strong competition in the sub- Rs. 10,000 or the "affordable smartphone" segment.
However, for Chinese brands like Lenovo, Oppo, Vivo and Xiaomi -- which have carved out a strong position in the Indian market -- 2017 could be a difficult year.
The report mentioned, "2017 will be difficult for them from two fronts. One is about them being able to keep the momentum of magnitude of spend going to remain visible and impact worthy as before. The second and even important one is to strengthen in the affordable smartphone segment."
These brands hit the 'value for money' segment which propelled Indian mobile users, especially the youth, to upgrade/replace in this segment of Rs 10,000-20,000. This is the segment that helped these Chinese brands expand their position in the Indian handset market.