New Delhi: While Apple has seen a steady increase in the sales of iPhones over the last three years, the overall Indian smartphone market is set for its second year of contraction for the first time in 14 years.

According to Mint, smartphone shipments crossed 100 million for the first time in 2015, peaked at 160 million in 2021, and fell 10% to 144 million in 2022.

According to data from IDC, shipments may fall a further 2-6% to touch 135-140 million in 2023.

The report noted that high inflationary conditions have squeezed disposable incomes, especially at the bottom of the pyramid, which have impacted upgrades and new sales.

“Users are upgrading or changing devices after 36 months or more, which used to be 18 months to two years till some time ago. The replacement cycles are getting longer, which is bound to impact smartphone players and the overall market," an executive told the business daily, on the condition of anonymity.

Consequently, slow demand and inventory build-up, which was carried forward from 2022, is leading to a decline in smartphone sales.

Shilpi Jain, senior research analyst at Counterpoint Research, told Mint: "The decline is due to slow demand and inventory build-up, which was carried from 2022. Most of the brands focussed on clearing existing inventory in Q1 and Q2 2023 so that they can plan to push new launches’ inventory in the second half of the year during the festive season."

Jain expects the smartphone market to contract by 1%.

Also read: India’s Smartphone Market Remains Under Pressure on Weak Demand for Budget Phones: Report

Another top executive at a telecom firm told the newspaper that users are holding on to their devices much longer than earlier. This, the executive said, is because better quality phones are available at affordable prices.

Meanwhile, vendors and manufacturers are working to ensure they don’t over-supply products, and offer discounts during the festive period which starts around Diwali.

Smartphone sales are an important indicator of private consumption, which is the biggest component of the economy.

Note that private consumption has grown only by a measly 2.8% at constant prices in Q4, although the GDP growth for January to March 2022-23 surprised on the upside at 6.1%.

Pronab Sen, former chief statistician of India, told The Wire's M.K. Venu that though GDP numbers show some signs of recovery, a very skewed income distribution is also visible, and is most worrying.

This is evident from news reports on the weak demand for budget phones and vendors looking to clear their inventory since last year.

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