Smartphone Sales Volumes Slump 18–20% During Diwali 2026 Amid Rising Prices

India’s smartphone market experienced one of its weakest Diwali sales seasons in recent years, with unit volumes declining by 18–20% compared with the previous year. Despite a late recovery between Dhanteras and Diwali, the improvement was not enough to offset the sharp slowdown in purchases during the weeks leading up to the festival. Rising smartphone prices, driven largely by higher global memory chip costs, encouraged consumers to postpone upgrades and reconsider their spending.

The slowdown affected retailers across the country, particularly smaller stores that depend heavily on affordable smartphones. While overall retail sales value remained broadly in line with last year’s Diwali levels, fewer devices were sold. The contrasting performance highlights how higher prices are supporting market revenue even as consumers purchase fewer smartphones.

Smartphone Sales Fall 18–20% During Diwali

According to the All India Mobile Retailers Association (AIMRA), smartphone sales volumes declined by approximately 18–20% during Diwali 2026 compared with the previous festive season.

Kailash Lakhyani, chairman of AIMRA, which represents around 250,000 mobile retailers across India, said the market experienced a particularly weak period before Dhanteras.

Sales volumes during the seven days before Dhanteras fell by approximately 40% year-on-year. Although retail activity improved during the period between Dhanteras and Diwali, the late recovery could not fully compensate for the earlier decline.

Counterpoint Research also reported a similar trend. Its data showed that smartphone sales volumes fell around 20% between October 8 and October 29 compared with the corresponding period during the previous year’s festive season.

There was some improvement during the final 10 days leading up to Diwali, particularly in eastern and central India. However, demand remained weak across much of the country.

Rising Memory Chip Prices Push Smartphone Costs Higher

One of the biggest reasons behind the slowdown is the increase in global memory chip prices.

Smartphones depend on memory components such as DRAM and NAND flash storage. These components are essential for running applications, storing photographs and videos, and managing device performance.

Increasing demand for memory from the artificial intelligence and data centre industries has tightened supply and pushed component costs higher. Smartphone manufacturers have faced pressure to absorb these increases or pass them on to consumers through higher retail prices.

The impact has been particularly visible in affordable and mid-range smartphones, where buyers are more sensitive to price changes.

Counterpoint Research had earlier projected a 12% decline in India’s festive-season smartphone volumes, while expecting market value to increase by 5%. The difference reflected expectations that higher average selling prices would partly offset declining unit sales.

The actual Diwali sales figures reported by retailers indicate that the volume pressure was even more pronounced.

Consumers Delay Smartphone Upgrades

Higher prices have changed how Indian consumers approach smartphone purchases.

Instead of upgrading their devices during the festive season, many buyers have decided to wait for prices to stabilise or for more attractive discounts.

This has affected the traditional festive sales model, which relies on new launches, promotional offers and discounts to encourage customers to replace their existing phones.

Consumers are also becoming more selective about the specifications they receive for their money. Buyers who previously considered purchasing a new device may now choose to continue using their existing smartphones or look for pre-owned alternatives.

According to Counterpoint Research, Tier-III cities and smaller towns recorded the fastest growth in sales during the final festive period, although the broader market remained under pressure.

Financing has also become an important part of smartphone purchases. Counterpoint indicated that around 46% of sales were made through financing, while AIMRA members estimated that financing accounted for approximately 60% of transactions.

The figures differ because they come from separate assessments, but both highlight the growing importance of instalment-based purchases.

Affordable Smartphone Retailers Face the Biggest Pressure

Smaller retailers selling smartphones priced below ₹20,000 have faced particularly difficult conditions.

According to AIMRA, customers looking for smartphones below ₹15,000 frequently left stores without purchasing a device or considered buying a pre-owned phone instead.

This creates a challenge for retailers that depend on entry-level devices to generate regular sales.

The pressure has also increased because online platforms can offer lower prices due to differences in distribution and operating costs.

AIMRA chairman Kailash Lakhyani said some physical retailers purchased heavily discounted smartphone inventory from e-commerce platforms at an average price of approximately ₹11,500 and resold the devices through their stores to maintain sales.

The trend reflects the increasingly competitive relationship between online marketplaces and traditional mobile retailers.

Large Retail Chains Perform Better Than Smaller Stores

While smaller retailers struggled, large-format retailers and modern trade outlets reported comparatively healthy sales.

These businesses benefited from purchasing substantial quantities of smartphones in advance, when prices were lower. This allowed them to offer discounts of approximately 12–15% during the festive season.

Their ability to procure inventory at favourable prices helped them remain competitive when manufacturers and distributors were facing higher component costs.

The difference in performance highlights how inventory management and purchasing power can influence retail results during periods of price volatility.

Smaller retailers generally have less flexibility to stock large quantities in advance, leaving them more exposed to sudden changes in procurement costs and promotional pricing.

India’s Smartphone Market Faces a Wider Slowdown

The weak Diwali season follows a difficult period for India’s smartphone industry.

Counterpoint Research reported that smartphone shipments declined 20% year-on-year in the July–September 2026 quarter. Shipments below ₹20,000 fell by 47%, indicating particularly severe pressure in the mass-market segment.

Omdia separately estimated that shipments declined 26% to 35.8 million units during the same quarter. Differences between research firms can arise from their tracking methods and market definitions, but both assessments point to significant weakness.

The slowdown is also affecting manufacturers’ production plans. Industry reports have indicated that smartphone and television makers are considering production reductions as weaker festive demand leaves retailers with excess inventory.

For smartphone brands, the challenge is to balance higher component costs with consumer affordability while avoiding excessive stock accumulation.

The Bigger Picture

India’s smartphone market is facing a shift from volume-driven growth towards a more value-oriented market. Higher device prices can keep sales revenue relatively stable even when fewer smartphones are sold, but this does not necessarily indicate stronger underlying demand. The pressure is particularly significant for consumers who depend on affordable devices and have limited flexibility to absorb price increases.

The situation also reflects the growing influence of the global AI infrastructure boom on consumer electronics. Demand for memory components from data centres can affect the cost of smartphones, computers and other devices. As manufacturers adjust prices and product specifications, Indian consumers may face fewer affordable upgrade options.

Looking Ahead

The industry’s next challenge will be managing inventory and pricing after the festive season. Manufacturers may need to adjust production, introduce more affordable models or offer financing and exchange incentives to encourage consumers to upgrade. However, the effectiveness of these measures will depend on memory component prices and household spending conditions.

For consumers, smartphone replacement cycles could become longer if prices remain elevated. Manufacturers that can deliver reliable performance at accessible price points may find opportunities to attract buyers who are increasingly focused on value for money. Until affordability improves, India’s smartphone market could continue to experience pressure on unit sales.

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