Entry-level 5G smartphone market hots up ahead of festival season

India's sub-Rs 10,000 5G smartphone market is heating up with festive offers and brand launches as affordable chipsets boost supply and demand ahead of the shopping season

India’s entry-level 5G smartphone segment, typically held to be those priced below ₹10,000, is set to bustle in the upcoming festival season as brands like HMD, Poco, and Lava launch their products.

 

Industry insiders say changes to goods and services tax (GST) rates, which take effect on September 22, will help in pushing up sales even as the rate on smartphones remains constant at 18 per cent. “All the three chipset providers in the segment — Qualcomm, MediaTek and Unisoc — have solutions available, enabling original equipment makers to make 5G smartphones for less than ₹10,000. 

 

There are six-seven such models and we are seeing more to come soon,” said Faisal Kawoosa, founder, research firm TechArc.

 

Tarun Pathak, research director, Counterpoint Research, said there would be a 2 percentage point increase in the segment this year compared to previous years of de-growth.

 

In 2022-23, the category contributed almost 33 per cent of the smartphone market while today the share has fallen to 18-19 per cent since the upgrade from feature phones to smartphones has slowed in the past two years and users in this segment moved to ones that cost more.  

 

“We have started seeing 5G penetrating the sub-₹10,000, which has arrested the decline of this segment,” Pathak added.

 

But he said margins in this category were razor-thin.

 

HMD on Thursday launched a 5G smartphone at ₹8,999 while Lava announced Bold N1 at ₹6,749. They will add to the range of brands — including Realme, Itel, Tecno and the latest brand entry by NxtQuantum Shift Technologies AI+ — that may offer models at under ₹5,000.

 

“The product-value equation for the sub-₹10,000 and the kind of output which you are getting from products, especially like HMD, are shifting the needle. So we expect this segment to grow because offers are good here,” said Ravi Kunwar, chief executive officer and vice-president, HMD India and APAC, pointing to better features, including artificial intelligence, being baked into the products from the beginning of customer use.

 

With the festival season coming, offers and discounts may make devices even more affordable. “These are special prices available during festival sales, so a lot of consumers would like to take advantage of this,” said Kawoosa.

 

A senior industry executive added the change of rates in GST might benefit the entry-level segment indirectly because savings elsewhere could be used to buy smartphones.

 

“GST coming down on a lot of other things can increase disposable income, and people who were thinking of buying a 5G phone can now buy one. Consumer finance too may help in this transition,” the executive added. 

Spurt in activity 

• HMD, Lava, Poco, Realme and others to spur ₹10,000 5G market
• Segment share to see growth after two years of contraction
• Festival season offers may get more buyers to trade up from 4G
• Easier finance options could also push demand