Premium push or rising costs: What's shrinking India's budget phone market
India’s smartphone market is increasingly shifting toward higher-priced devices. According to market intelligence firm Counterpoint Research, the ultra-premium segment (₹45,000+) captured 17 per cent share of the market in the fourth quarter of calendar year 2025 — its highest ever. Demand for flagship smartphones has also increased, with iPhone 16 emerging as the highest-shipped device in India for the third consecutive quarter ending December 2025.
The trend has been building for some time. The premium segment (₹30,000+) was the fastest-growing category in the third quarter of 2025 with 29 per cent year-on-year shipment growth, while the ultra-premium segment also recorded a strong 37 per cent year-on-year growth in the second quarter of 2025.
Industry executives and analysts say that the premiumisation of India’s smartphone market, and the relative decline of budget devices, cannot be explained by consumer demand alone. Instead, they point to a combination of rising component costs, profitability pressures, and changing product strategies among smartphone makers.
“Premiumisation is a business strategy adopted by a few global brands in the India market. It is not entirely a demand shift, but propelled by supply conditions,” said Sumit Singh, Product Head at Lava International. He added that rising component costs have pushed many companies to expand their portfolios in higher price bands in order to sustain margins.
Industry analysts say the shift toward profitability has been building for several years. Mohammad Faisal Ali Kawoosa, Chief Analyst at Techarc, said many smartphone brands began moving away from the lowest price bands even before component prices started climbing.
“As companies began focusing more on profitability than revenue, many OEMs started divesting from the affordable range,” Kawoosa said.
Data from Counterpoint Research reflects this shift in market dynamics. According to the research firm, the value share of smartphones priced below ₹20,000 fell to 29 per cent in 2025, down from 38 per cent two years earlier. At the same time, premium smartphones are accounting for a larger share of market value, with companies such as Apple strengthening their presence in higher price segments.
Sanyam Chaurasia, Principal Analyst at Omdia, said rising component costs are gradually pushing up the entry price floor for smartphones in India.
Why brands are moving away from budget phones
One of the biggest pressures on smartphone makers has been the rising cost of key components such as memory and displays, which directly affect the pricing of entry-level devices.
According to International Data Corporation (IDC), the global average selling price (ASP) of smartphones is expected to rise by around 14 per cent to $523 in 2026 as manufacturers move toward higher-margin models to offset rising component costs.
Singh said these supply-side pressures are already shaping product strategies.
“Rising component costs have pushed brands to expand portfolios in higher price bands to sustain margins, reducing product launches in entry segments,” he said.
A visible slowdown in entry-level launches
Recent launch activity also reflects this shift. According to research firm Techarc, only 13 smartphone models and 30 variants were launched in India in January 2026 across seven brands — Oppo, Realme, Poco, Motorola, Vivo, Redmi, and Lava.
That compares with 19 launches recorded in January 2024 and January 2025.
Techarc’s analysis suggests that brands are scaling back launches in the sub-₹15,000 category that historically drove shipment volumes. The lowest-priced device introduced that month — the Blaze Duo 3 from Lava International — was priced at ₹16,999.
Where the market is heading
Chaurasia said the shift in pricing bands is likely to become more visible over the next year.
Devices priced below ₹10,000 could decline to around 12–13 per cent of shipments in 2026, compared with roughly 18 per cent in 2025, he said.
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“Much of the upgrade demand is concentrating in the broader ₹25,000–₹60,000 ‘flagship killer’ segment,” Chaurasia said, adding that Chinese smartphone manufacturers are increasingly targeting this range while companies such as Apple and Samsung Electronics continue to consolidate the ₹60,000-plus premium tier.
Budget demand still exists
Despite the broader premiumisation trend, some manufacturers say demand for entry-level smartphones remains strong in several parts of India.
Singh said Tier II and Tier III cities account for more than half of India’s smartphone demand, with many users still upgrading from feature phones to their first smartphones.
He also pointed to growth within the entry-level segment itself. According to Singh, Lava International was the fastest-growing brand in the sub-₹10,000 category in 2025, recording around 156 per cent year-on-year growth.
“The entry-level smartphone market is not structurally shrinking, but it is rapidly evolving,” Singh said.
A risk of widening the digital divide
However, analysts warn that the shift away from ultra-affordable smartphones could have wider implications for India’s digital ecosystem.
Kawoosa said affordability remains a significant barrier for many first-time smartphone users, particularly in lower-income households.
“From a consumer’s point of view, even spending $100 on a smartphone is still a very big decision,” he said.
According to Kawoosa, expanding smartphone access remains important for bringing new users into the digital ecosystem and making initiatives such as Digital India more meaningful.
He added that addressing the affordability challenge will likely require collaboration across the industry, including device manufacturers, telecom operators, and component suppliers.
