How rising costs give Indian brands room to revive budget smartphones

Rising memory and component costs are pushing established smartphone makers towards higher price points, leaving room for Indian brands to target budget-conscious buyers

Rising memory and component costs have pushed smartphone prices higher, while several established brands are moving towards more expensive devices as the economics of selling smartphones at lower price points become harder to sustain. Industry-wide average selling prices reached a record $550 in the first quarter of 2026, up $100 from a year earlier, according to market tracking firm International Data Corporation (IDC).

 

That is creating room at the lower end of the market, particularly below Rs 20,000, where established brands have gradually reduced their presence.

 

A new set of Indian brands is now looking to fill that gap. Fire-Boltt, better known for its smartwatches and audio products, has entered the smartphone market. While Mivi, another smartphone accessory brand is planning to enter the category soon.

 

 

For these companies, the timing is favourable. But the bigger question is whether a market opportunity created by rising prices can translate into a sustainable smartphone business.

A gap below Rs 20,000

The opportunity at the lower end of the market is not new. What has changed is the number of established brands willing to compete for it.

 

Navkendar Singh, associate vice-president at IDC India, said there is a meaningful opportunity below Rs 20,000-25,000 because several established brands have moved away from the segment.

 

“This is a significant opportunity below 20-25k price point. Most of the brands have vacated it or they're not able to compete,” Singh said.

Similarly, Faisal Kawoosa, founder and chief analyst at Techarc, estimates that India still needs about 40 million 4G smartphones, all of them in the entry-level category. A substantial portion of this demand, he said, could also be addressed by brands offering 5G smartphones at similar prices.

 

The pressure on existing brands is partly explained by the changing cost structure of smartphones. Memory and storage now account for more than 60 per cent of the bill of materials for budget smartphones, according to Omdia. Manufacturers therefore have had to either raise prices or absorb lower margins.

 

For brands with a large part of their business concentrated in the lower and mid-range segments, moving up the price ladder has consequently become an increasingly important way to protect profitability.

New Indian brands see an opening

Fire-Boltt's entry comes against this backdrop. Arnav Kishore, founder and chief executive officer of Boltt, said that he believes that “this is precisely the right time for a strong Indian brand to enter the smartphone category.”

 

He said the company sees consumers looking for meaningful upgrades rather than small specification changes, while the large installed base of older 4G smartphones, feature phones and entry-level devices provides a potential customer base.

Kishore also sees a gap between affordability and the overall ownership experience. He said buyers in the mass market often have to compromise on performance, display quality, battery life, cameras, software or after-sales support. Boltt's approach, he said, is to combine these features with a service network and customer support infrastructure.

 

“Consumers today are highly informed and will not accept poor quality simply because a device is less expensive,” Kishore said.

Indian brands 2.0

The current crop of Indian smartphone companies also appears to be approaching the market differently from the previous generation of local brands.

 

Kawoosa said one of the biggest mistakes made by Indian brands such as Lava and Micromax was their failure to establish themselves in higher price segments. He believes newer companies are taking a more aggressive approach from the beginning, working on products, branding and distribution at the same time.

 

“Since, these brands are just beginning they can afford to lose money to build market share,” Kawoosa said.

 

Even if rising component costs affect these companies too, he said they may be willing to absorb some of the increase rather than immediately pass it on to consumers. That could make their phones more affordable than competing products and help them acquire users.

 

The intention to move beyond the entry-level segment is also visible among the new entrants.

 

Boltt's first smartphones are focused on the Rs 10,000-15,000 segment, but Kishore said the company does not intend to remain confined to it. The initial portfolio, he said, is meant to establish the brand, its products and its service network before the company moves into other segments.

 

“However, we do not view Boltt as being restricted to the entry-level market,” Kishore said. “Over time, we see a clear opportunity to move higher up the price ladder with differentiated devices across additional segments.”

 

Kawoosa points to AI+'s association with comedian Samay Raina as another example of how newer brands are approaching the market differently. He said establishing relevance among Gen Z was one of the weaker areas for the earlier generation of Indian smartphone brands.

Lava is taking a longer view

Lava, which has remained in the smartphone market through the difficult years for Indian brands, sees the current conditions as an opportunity but does not consider low prices sufficient to win consumers.

 

Sumit Singh, senior vice-president and head of product at Lava, said more than 70 per cent of India's smartphone market continues to buy devices below Rs 30,000. The company remains focused on this segment.

 

“Our focus remains firmly on the sub-Rs 30,000 segment, where we see the biggest opportunity to democratise premium technology,” he said.

 

The company also believes its longer presence in the market gives it an advantage in areas such as software updates, after-sales service and brand trust.

 

That could become increasingly important as replacement cycles lengthen.

 

Singh said consumers now consider product quality, software support, after-sales service and brand trust alongside specifications. IDC's Singh made a similar point, arguing that the opportunity currently available to Indian brands may not represent a permanent structural shift.

 

“I would not call it a structural shift. This will probably last for 1-1.5 years,” he said.

 

He expects the initial opportunity to benefit brands that can fill the gap left by larger manufacturers, but said sustaining it would require sales and service infrastructure, software support and consumer trust.

Manufacturing could help, but not solve everything

Local manufacturing could give Indian brands some additional room to compete, although it does not eliminate their dependence on imported components.

 

Lava said its in-house manufacturing, R&D and hardware and software testing capabilities give it greater control over costs and quality. Its new Noida component facility has an annual capacity of nearly nine million chargers and components, while local sourcing and in-house design have reduced charger costs by around 20 per cent compared with imports, according to the company.

 

The company is also planning investments in camera and display modules, enclosures and multi-layer PCBs over the next five years.

 

Still, Lava acknowledged that India is not yet self-reliant across the smartphone supply chain and that some important components will continue to be imported.

 

For newer brands, the advantage may instead come from having a smaller organisation and a willingness to accept lower margins while they establish themselves. Kawoosa said the government's new MPMS scheme also gives Indian brands an additional 3 per cent advantage, which could help narrow the cost gap.

The real test comes later

Consumers are already adapting to higher smartphone prices in other ways. India's smartphone shipments fell 11.1 per cent year-on-year to 33.2 million units in the April-June quarter, while the value of the market increased 3.6 per cent in the first half of 2026.

 

Longer replacement cycles are one consequence. Another is a growing dependence on financing. EMI purchases accounted for 57.5 per cent of smartphone purchases in India's Tier 2 mainline market in the second quarter, up from 44 per cent a year earlier.

 

For consumers who still want a new phone but cannot or do not want to spend more, cheaper Indian brands provide another option.

 

IDC’s Singh summed up the choice facing buyers as paying more for an established brand, keeping their existing phone for longer, entering the second-hand market or buying an Indian brand.

 

For the new companies, however, the easier part may be getting that first purchase.

 

Kawoosa believes their real test will come about three to five years into their businesses, when the priority shifts from acquiring users to generating profits and those first customers begin looking for upgrades.

 

That is also when the current cost advantage may no longer be enough. The companies will need to offer a clear upgrade path, maintain software and service support, and convince consumers to buy their second smartphone from the same brand.

 

For now, rising prices have given Indian smartphone makers an opening that has been difficult to find for years. Whether it becomes a brief window or the beginning of a sustained revival will depend on what they build after the first sale.

kasper