Why smartphone price inflation is hitting India harder than other markets

Smartphone brands have raised prices multiple times in the first half of 2026. Market tracker Counterpoint Research has now put a number to the increase, confirming that India has been the worst hit

India has recorded the sharpest rise in smartphone prices of any market tracked by Counterpoint Research this year. Retail prices here are up 21 per cent on average in 2026 so far, ahead of Asia Pacific at 19 per cent, the Middle East and Africa at 18 per cent, and Latin America at 16 per cent.

 

Part of the reason India stands out is the shape of its market. Low- and mid-range phones make up a much bigger share of volumes here than in markets where premium devices dominate, leaving manufacturers with less room to absorb a sudden jump in component costs. Counterpoint says this is one reason price-sensitive markets have seen the sharpest increases.

 

State of Indian smartphone market

The 21 per cent figure comes after months of price increases across the market. By the end of the June quarter, nearly every major smartphone maker had raised prices more than once, taking the average increase to around 15 per cent, Counterpoint said.

The pain was worse at the bottom of the market. Smartphone shipments in India fell 10 per cent year-on-year in Q2 2026, the steepest drop for a June quarter in six years. Within that, the sub-Rs 15,000 segment saw shipments fall 45 per cent, as brands struggled to hold prices in a segment where consumers are sensitive to even small increases.

 

Memory was at the centre of that pressure. Counterpoint said memory's share of the bill of materials for phones priced below Rs 15,000 has risen from under 20 per cent to more than 45 per cent. Brands have responded with repeated price increases and by pushing more 4G models to keep some cheaper options on shelves.

 

The Q2 numbers explain why the 21 per cent figure matters. Volumes were already falling before the latest round of price increases. Buyers, meanwhile, have leaned more on financing to cover the higher upfront cost, with financing accounting for more than half of mainline smartphone sales in the quarter, according to Counterpoint.

Brands are cutting specs to hold the line on cost

Raising prices is not the only lever brands are pulling. Many are also changing what goes into new phones, especially in the lower and mid tiers, to keep the bill of materials in check.

 

Counterpoint's analysis of smartphone component costs shows how sharply the economics have changed. In Q2 2026, a low-end phone with roughly the same specifications as its 2025 equivalent cost 70 per cent more to build, with memory responsible for almost all of that increase. In the mid-range, bill-of-materials costs were up 52 per cent, with memory making up about 40 per cent of the rise.

 

This shows up directly in what is being left out of phones.

 

In May, Lava told Business Standard that phones in the $150-200 range that previously offered 8GB RAM, 256GB storage and stronger chipsets could move towards 6GB RAM, 128GB storage and lower-tier processors as brands attempt to control costs.

Counterpoint also said original equipment manufacturers (OEMs) are using lower storage capacities, simpler camera configurations and more 4G models in some segments to manage costs.

Indian brands see a second chance

Chinese brands built their dominance in India's budget segment by offering better specifications at aggressive prices, a strategy Indian companies struggled to match. That volume-led approach is now getting harder to pull off as memory and component costs rise, and as established brands shift their focus to higher price points. The gap left behind is giving Indian companies another shot at the market.

 

This time round, though, Indian brands are coming back into a market that's much tougher to win on price alone. IDC's Navkendar Singh previously told Business Standard that there's a real opening below Rs 20,000-25,000, since several established brands have either exited that segment or can no longer compete in it effectively.

 

That gap is drawing in a new set of players. Fire-Boltt, known until now for smartwatches, is entering smartphones with devices priced between Rs 10,000 and 15,000. Founder Arnav Kishore said the company is targeting the large base of users still on older 4G smartphones, feature phones and entry-level devices.

 

The cost squeeze itself might actually work in these companies' favour. New entrants don't carry the same margin expectations as established players, and Kawoosa said they may be willing to absorb some of the rise in component costs to build market share early on.

 

The scale of the opportunity is not small either. Techarc estimates India still needs about 40 million 4G smartphones, all of it entry-level demand. Some of that could move to 5G phones too, if brands manage to price them close to what buyers are already used to paying.

 

The harder question is whether this turns into anything lasting. Singh expects the current window to stay open for only about a year to a year and a half, and says holding on to any gains after that will depend on having proper sales and service infrastructure, software support, and consumer trust built up in that time.