India Smartphone Sales Down 12% This Festive Season

India’s smartphone market is heading into the 2026 festive season with an unusual outlook: sales volumes are expected to fall 12% year-on-year, even as the market’s overall value rises 5%. The forecast from Counterpoint Research highlights the growing impact of higher memory costs, rising device prices and consumers postponing discretionary upgrades.

The shift also signals a change in how festive demand is being generated. Rather than relying primarily on first-time buyers and large volumes of budget phones, manufacturers and retailers are increasingly looking to existing smartphone owners willing to upgrade to more expensive devices through exchange offers, financing and buyback programmes. The result could be a market that generates more revenue from fewer devices, while affordability becomes a bigger challenge for price-sensitive consumers.

Key takeaways

• Smartphone volumes: Counterpoint Research expects India’s festive-season smartphone sales to decline 12% year-on-year.
• Market value: Despite fewer units sold, overall market value is projected to increase 5%.
• Higher component costs: Rising memory prices are pushing up smartphone prices and reducing manufacturers’ ability to offer deep discounts.
• Longer replacement cycles: Some consumers are delaying upgrades, shrinking the pool of buyers ready to purchase a new phone.
• Premiumisation: Existing users upgrading to higher-priced devices are expected to support market value.
• Financing and exchanges: Easy monthly payments, trade-ins and buyback offers are becoming increasingly important to convert interest into sales.
• Industry challenge: Brands must balance higher selling prices with affordability, sales volumes and profitability.

India’s Festive Smartphone Market Faces a Volume Decline

The festive period is traditionally important for smartphone manufacturers and retailers in India. Sales events around major festivals attract consumers with discounts, bank offers, exchange bonuses and financing schemes. Companies often use this period to clear inventory, introduce new models and capture customers who have postponed purchases.

However, the 2026 season is expected to be more challenging. Counterpoint Research forecasts a 12% year-on-year decline in smartphone sales volumes during the festive period running from October 8 to November 8, 2026. At the same time, it expects market value to grow 5%.

The difference between the two forecasts is significant. It suggests that higher prices and a greater contribution from expensive devices may offset some of the revenue impact of selling fewer smartphones.

For manufacturers, distributors and retailers, however, higher market value does not automatically mean stronger profits. Companies must also account for component costs, promotional spending, inventory expenses and the possibility that higher prices will discourage customers from buying.

The outlook also indicates that festive promotions may not produce the same unit-sales boost that consumers and businesses have come to expect. When customers face higher prices, some may choose to repair their current phones, postpone upgrades or buy less expensive models.

As a result, smartphone companies will need to focus on both the value of each transaction and the number of customers they can persuade to complete a purchase.

Why Smartphone Market Value Can Rise While Sales Fall

Smartphone market value measures the total value of devices sold, while sales volume measures the number of units sold. The two measures can move in opposite directions when the average selling price increases.

For example, a market that sells fewer phones can still generate more revenue if the average price of each phone rises sufficiently. This can happen when component costs increase, buyers move towards premium models or manufacturers reduce discounts.

Counterpoint’s festive-season forecast reflects this dynamic. The expected 12% decline in volume is being accompanied by projected growth of 5% in market value, supported by higher average selling prices and continued spending on selected higher-value smartphones.

An illustrative example shows how the difference works.

Illustrative market measure	Previous festive season	Current festive season
Smartphones sold	100 units	88 units
Average selling price	100 price units	119.3 price units
Total market value	10,000	Approximately 10,500
Change in volume	—	-12%
Change in market value	—	+5%

Note: This is a mathematical illustration, not Counterpoint’s actual sales data. It shows how an increase in average selling price can offset a decline in units sold.

The commercial implications differ for each participant in the supply chain. Manufacturers may generate more revenue per device, but higher component costs can reduce the benefit. Retailers may sell fewer units, but premium models can increase the value of each transaction. Consumers, meanwhile, may face a higher cost of replacing an existing phone.

Rising Memory Costs Are Pushing Up Smartphone Prices

One of the main factors behind the weaker volume outlook is the increase in memory costs. Smartphones use memory components to run applications, store data and manage multiple tasks. These components form part of the bill of materials, which is the combined cost of the components used to manufacture a device.

When memory becomes more expensive, manufacturers face several choices. They can absorb the additional cost and accept lower margins, increase retail prices, reduce promotional spending or adjust product specifications and model line-ups.

Each option involves a trade-off. Absorbing costs can protect affordability but put pressure on profits. Raising prices may preserve margins but discourage purchases. Reducing discounts can also make phones less attractive during the festive period, when shoppers expect competitive offers.

The pressure is not limited to India. Reuters reported on October 12 that a global memory shortage contributed to a sharp year-on-year decline in smartphone shipments during the third quarter of 2026, with rising costs linked in part to demand from artificial intelligence infrastructure projects. That global trend provides additional context for the pricing challenges facing smartphone manufacturers.

For Indian consumers, the effect can be particularly pronounced in lower-priced segments. Buyers with limited budgets may have less room to absorb price increases, while customers purchasing premium devices may be more willing to consider financing or an exchange.

The result is a market in which the cost of memory influences not only manufacturers’ margins but also the timing of purchases and the range of devices consumers can afford.

Consumers Are Delaying Upgrades

Higher prices are changing the reasons people buy smartphones. Some customers who would ordinarily replace their devices during the festive season may decide to wait another six months or a year.

This matters because a smartphone upgrade is often discretionary. A phone that continues to function adequately may not need to be replaced immediately, even if a newer model offers a better camera, faster processor or additional artificial intelligence features.

Counterpoint Research Research Director Tarun Pathak said the size of the active consumer pool would be a key challenge during the festive season. Higher prices, he noted, could keep consumers on the sidelines, with discretionary upgrades deferred and purchases increasingly driven by replacement needs.

A smaller active buyer pool creates a challenge for brands that depend on large sales volumes. Marketing campaigns and discounts may attract attention without necessarily convincing customers to spend money.

The pattern also changes the competitive landscape. Brands may need to concentrate on consumers whose existing phones are damaged, outdated or no longer meet their needs. Those customers may be more willing to buy even when prices rise.

At the same time, customers with functioning devices may become less responsive to promotions. A discount that would previously have encouraged an upgrade may no longer be sufficient to overcome the perceived cost of replacing a phone.

Premium Smartphones Could Support Market Value

The forecast points towards an increasing role for premium smartphones in India’s festive market. While price-sensitive buyers may postpone purchases, some existing users are continuing to spend on more expensive devices.

Demand in the ₹60,000–₹1 lakh segment is being supported by financing and trade-ins, according to Servify founder and chief executive Sreevathsa Prabhakar, as reported by The Economic Times. Purchases above ₹1 lakh, including foldable smartphones, are largely coming from existing premium users who upgrade every 12–24 months.

This is an important distinction. Premium sales are not necessarily being driven by a large wave of first-time smartphone buyers moving directly into expensive models. Instead, part of the demand comes from customers who already own premium devices and are accustomed to replacing them more frequently.

Premium smartphones can also contribute disproportionately to market value because each sale represents a higher transaction amount. Even if the number of premium devices sold remains relatively small, a higher average selling price can support the overall market’s revenue.

However, premiumisation has limits. Not every customer can afford a flagship phone, and the broader market still depends on consumers who buy entry-level and mid-range devices. If higher prices push too many customers out of the market, the industry could face weaker volumes across multiple price segments.

The challenge for manufacturers is to attract premium buyers without neglecting customers who are more sensitive to price changes.

Financing and Exchange Offers Become More Important

With smartphone prices rising, financing options and exchange programmes are becoming more important tools for retailers and manufacturers.

Financing allows customers to spread the cost of a phone across instalments instead of paying the full amount upfront. Exchange offers reduce the effective purchase price by assigning value to a customer’s existing device. Buyback programmes can provide additional reassurance by offering a future resale or repurchase arrangement under specified terms.

These schemes can make an upgrade more affordable in the short term, particularly for customers who want a premium model but do not want to pay the full price immediately.

Servify, which handles more than 300,000 device trade-ins annually, said trade-in volumes during October and November are typically around 50% higher than in regular months. The figure highlights the importance of exchanges during the festive period, when consumers are more actively considering upgrades.

Trade-ins also support the secondary smartphone market. Devices collected through exchange programmes can be refurbished, resold or processed through other channels, depending on their condition and the programme’s terms.

For retailers, exchange and financing offers can help convert customer interest into actual sales. For manufacturers, they can sustain demand for higher-priced models without relying entirely on direct discounts.

Nevertheless, financing does not eliminate affordability concerns. Customers must still consider instalment commitments, interest charges where applicable, eligibility requirements and the value offered for their old phone. If monthly payments remain too high, some consumers may still postpone an upgrade.

Budget Smartphones Face Greater Pressure

The entry-level segment is especially vulnerable when prices rise. Customers shopping for phones below ₹10,000 generally have tighter budgets and may be less willing to absorb higher costs.

The Economic Times previously reported that smartphone volumes in this segment were expected to decline 20% in 2026, according to Counterpoint Research. Rising component costs have pushed brands to increase prices and reconsider their presence in the most affordable category.

For consumers, this can mean fewer attractive options at a fixed price point. A phone that once offered a particular combination of memory, storage and performance may become more expensive, or manufacturers may adjust specifications to manage costs.

The effect can extend beyond first-time buyers. Customers replacing older budget smartphones may find that comparable specifications now cost more than expected. Some may choose refurbished devices, keep their existing phones for longer or stretch their budgets to buy a higher-priced model with financing.

For manufacturers, the entry-level market remains important because it serves a large pool of customers and helps establish brand relationships. However, maintaining attractive prices while component costs rise can be difficult.

Brands must decide how much cost they can absorb, which features are essential and how to maintain a compelling product proposition without undermining profitability.

What the Forecast Means for Smartphone Brands and Retailers

The combination of lower volumes and higher market value creates different challenges for companies across the smartphone industry.

Manufacturers must manage component costs while deciding how much of the increase to pass on to customers. Brands with a stronger premium portfolio may be better positioned to support average selling prices, but they still need to maintain demand and protect their margins.

Retailers face a different challenge. A higher-value transaction can be beneficial, but fewer purchases may reduce store traffic and the number of customers completing a sale. Financing, trade-ins and bundled services can help, although their success depends on the terms offered and consumers’ willingness to commit.

Online marketplaces may also need to adjust their promotional strategies. Large discounts can stimulate demand, but brands facing higher input costs may have less room to fund aggressive offers. Promotions may therefore become more targeted, with financing and exchange benefits taking a larger role.

The market’s performance will depend on how effectively these strategies convert demand into purchases. A rise in market value is positive in one sense, but it does not by itself establish that manufacturers or retailers are selling more units or earning higher profits.

The Bigger Picture

India’s smartphone market is showing signs of a shift from volume-led growth towards value-led growth. Higher prices and longer replacement cycles are making it harder to sell large numbers of devices, while premium smartphones and higher average selling prices are helping support total market value. This change is being reinforced by global memory-cost pressures, which are affecting both product pricing and manufacturers’ ability to offer discounts.

The trend creates a difficult balance for the industry. Premiumisation can improve the value generated by each sale, but a market cannot depend indefinitely on higher prices if too many consumers delay purchases. Manufacturers and retailers will need to maintain affordable choices, improve financing and exchange offers, and demonstrate clear reasons for consumers to upgrade.

Looking Ahead

The remainder of the festive season will show whether financing, trade-ins and promotional offers can offset the expected decline in smartphone volumes. Retailers will be watching conversion rates, sales across price bands and the response to premium models, while manufacturers will be assessing whether higher average selling prices are enough to protect revenue and margins. Actual festive-season results will be needed to determine how closely the market tracks Counterpoint’s forecast.

Beyond the festive period, memory prices and consumer replacement cycles will remain important factors for India’s smartphone industry. If component costs continue to rise, brands may face further pressure to increase prices or adjust product portfolios. The long-term opportunity remains significant, but sustaining growth will require companies to serve both premium customers and price-sensitive buyers in a market where affordability is becoming increasingly important.