1. Home
  2. Market
  3. Second wave dents India smartphone growth story

Second wave dents India smartphone growth story

With the revival of COVID-19, can smartphone makers in India avoid the trouble bubble?

In Market

Written by : Sanyam Chaurasia

Posted on 30/04/2021

With COVID-19, India has made it to the lifeboat, but the shore still seems far away. COVID-19 2.0 is tragically ravaging India, and the second wave has been a significant spoiler for India's smartphone sector. Amid a surge in COVID-19 cases, the road to economic recovery will again see a downturn. Increasing cases may adversely impact the job market, as it has in many other countries, with a follow-on decline in disposable income.

Canalys believes, despite a less stringent lockdown compared with Q2 last year, the India smartphone market will still take a hit. Primarily, the distribution channel side will be severely affected. Major markets like Maharashtra and Delhi are at the centre of new restrictions and these two markets account for around 20% of total Indian smartphone demand. Non-essential shops are shut and online deliveries are restricted in many states. After the initial phase, local authorities can allow shops to open for three hours a day, even for non-essentials and online deliveries can operate with precautions.

Compared to the first wave, state governments have the autonomy to implement regional lockdown measures by monitoring their states' situation. As state governments and centres juggle between lockdown and unlocking specific states and cities, smartphone production may taper down. Inter-state travel will be limited amid regional lockdowns, which means the shipping of components and end-products will remain challenging. Meanwhile it could also mean a temporary closure for selected manufacturing facilities in India, which will cause trouble for most smartphone makers. A key focus would be on the developments in Noida, which has manufacturing facilities for most major brands. Also, vendors are finding smartphone imports are no longer a variable alternative to supplement local manufacturing during factory shut downs, as the approval certification procedure now takes three months and a hefty 22% import duty is imposed on smartphone CBU.

Canalys though believes there is light at the end of the tunnel. The negative impact on the India market will be elevated in the next 12 to 18 months as the channel starts operating after the vaccination drive. It will also boost consumer confidence among the 18-55 demographic, where this new COVID-19 variant is most distressing.

For the India market in particular, the pandemic has been driving demand for smartphones especially for the below use cases:

  • kid's online classes
  • corporates for remote stations
  • population upgrading from Feature Phones to Smartphones for vaccine registrations
  • senior citizens using it for government apps.

Industry players are surely more prepared for the second wave, although the spread of the pandemic is not yet under control. Canalys believes demand will come back to normalcy if the vaccination roll out campaign is handled with efficiency, while the economy and society might take a bit longer to thrive.


Share this article