India’s smartphone market may be heading into a demand slowdown during the 2026 festive season, not because of weak intent, but because of rising prices that buyers are increasingly unwilling to absorb.

According to a joint study by Trakin Tech and Techarc, based on a survey of 5,958 prospective buyers, 54 per cent of intended demand may not convert into purchases if prices continue to rise beyond expectations. The report frames this as delayed demand rather than a collapse.

The survey followed Q1 CY2026 data by market intelligence entities such as Counterpoint, which reported that India’s smartphone shipments declined 3 per cent year-on-year in Q1 CY2026, marking the weakest first quarter in six years. It also projected a full-year decline of around 10 per cent, pointing to softer demand heading into the festive period — a trend that the study also reflects.

Demand is pausing, not disappearing

The headline number, 54 per cent demand erosion, appears severe at first glance. However, the underlying behaviour suggests deferral rather than abandonment.

The report stated that 48 per cent of surveyed buyers would delay purchases until prices stabilise, while 6 per cent indicated a shift to the second-hand market.

This creates a paradox for brands: demand visibility weakens in the short term, even as underlying intent remains intact.

As per the report’s interpretation, the festive cycle (July to December), traditionally a volume driver, may now act more as a pricing trigger. If pricing does not align with expectations, conversion shifts forward rather than disappears. This introduces volatility into quarterly sales planning, particularly for brands dependent on festive spikes.

Pricing pressure

The report attributed the current pressure not to weak demand, but to supply-side cost inflation. It notes that smartphone prices have already risen 8–12 per cent on average between January and May 2026, driven largely by increases in NAND flash and DRAM costs.

This trend is already visible in the market, with brands revising prices even after launch.

For instance, OnePlus has increased the price of its Nord 6 twice within a short span, pushing the base variant from Rs 38,999 at launch to Rs 42,999. Similarly, the Nothing Phone 3a Lite, which launched at Rs 20,999, is now listed at Rs 27,999. Several other brands, including Vivo and Samsung, have also adjusted pricing across models.

Such post-launch price increases weaken the value proposition typically associated with festive purchases, where buyers expect discounts rather than higher prices.

In IDC’s Q1 CY2026 report, Upasana Joshi, Senior Research Manager, Devices Research Asia/Pacific, said, “In a value-conscious market like India, consumers have traditionally delayed purchases in anticipation of festive discounts and promotional offers. However, that pattern is unlikely to hold in the current cycle.”

The broader cost environment also suggests that this shift may not reverse anytime soon.

“With the global memory shortage expected to continue into 2027 and rupee depreciation adding further cost pressure, smartphone prices are set to rise further across segments,” Joshi noted.

This weakens the assumption of a near-term price correction. If costs remain elevated, brands have limited room to absorb increases without affecting margins, particularly in the mid-range and entry segments.

Mid-range weakens as premium holds firm

The report highlighted that the impact of rising prices is not uniform across segments.

It identified the Rs 15,000–30,000 segment as the most vulnerable, with the highest deferral volume and a significant share of buyers (22 per cent in this band) opting to downtrade.

By contrast, the report stated that owners of ultra-premium devices (above Rs 1,00,000) show far lower sensitivity, with only 30.9 per cent deferring purchases and 44.4 per cent willing to buy regardless of price.

At a brand level, this resilience is most visible among Apple buyers, who record a commitment score of 54 — one of the highest in the study — indicating a stronger willingness to proceed with purchases despite price increases.

Counterpoint also noted that Apple is better positioned to navigate memory price pressures, supported by its premium portfolio and supply chain advantages.

Pressure is also building up at the lower end of the market. As entry-level devices become more expensive, buyers are either forced to stretch budgets or delay purchases.

However, this shift is not entirely driven by aspiration. Counterpoint describes it as an “affordability squeeze,” where rising prices and broader economic pressures are pushing consumers up the price ladder rather than reflecting stronger purchasing power.

Younger buyers hold the market together

One of the more counterintuitive findings, as per the report, is that younger buyers are the least likely to defer purchases despite rising prices. The report stated that buyers aged 18–24 showed a deferral rate of 43.1 per cent — the lowest among all age groups — compared to 54.8 per cent for those in the 35–44 bracket, which is the most price-sensitive cohort.

This showed that a younger, more aspirational cohort is both more willing to buy and more open to financing options such as EMI, which the report highlighted as a growing purchase pathway.

However, it should also be noted that 57 per cent of respondents in the study fall within the 18–24 age group, and since the study focuses on active, online, tech-engaged users, the behaviour of older and more price-sensitive buyers may be underrepresented.

Financing and refurbished channels move mainstream

The report also pointed to a shift in purchase pathways driven by affordability constraints. It noted that buyers who have previously used equated monthly instalment (EMI) are 3.5 times more likely to use financing again. This suggests that affordability constraints are increasingly being managed through credit rather than price correction.

However, this trend is uneven. Earlier, in an interview with Business Standard, Sumit Singh, SVP and Product Head at Lava International, said financing options remain limited in the entry-level segment.

“EMI adoption in this segment is only around 9 per cent, compared to 30–35 per cent for the overall industry. These users are often not salaried and don’t have access to easy financing. Even small price increases can push them out of the market,” Singh said.

Meanwhile, a growing share of consumers (six per cent) is open to refurbished devices. For brands, this introduces competition outside their control.

Brands such as Samsung have begun selling refurbished devices directly through their own channels, offering the same one-year warranty as new products, signalling a more formal push by original equipment manufacturers (OEMs) into the pre-owned segment.

Festive discounts may not be enough this year

The report suggested that a large share of buyers are entering the festive season with a willingness to wait rather than buy at current prices. It states that 48 per cent of intended buyers would postpone their purchase if prices rise beyond expectations, indicating that demand this year is highly conditional.

This shifts the role of the festive season. Instead of driving fresh demand, it becomes a test of whether pricing — through discounts, offers, or financing — is enough to unlock purchases that are already being held back.

“The intended buyers show divergently different signs of resilience and cohort behaviours which the brands need to bedrock their strategy on,” said Faisal Kawoosa, Founder and Chief Analyst at Techarc.

For consumers, that means the usual festive playbook may not hold. The choice is no longer just which phone to buy, but whether to delay, downgrade, or commit to longer payment cycles.

As Arun Prabhudesai, Founder of Trakin Tech, said, “India’s next growth cycle will not be won only by better specs; it will be won by brands that make technology feel affordable again.”

However, the report also indicates that price pressures are likely to persist into 2027 due to component costs. This suggests that waiting may not necessarily lead to significantly lower prices — forcing buyers to make more constrained decisions even during peak sale periods.