Indian smartphone brands are gaining market share as Chinese companies reduce their presence in the most price-sensitive segments, but the shift exposes a larger weakness in India’s electronics economy: the country has become a major manufacturing base without yet producing a widely trusted, technology-led domestic handset champion.
The immediate opening has come from an unfavourable combination of rising memory chip prices and weakening consumer demand. Chinese brands accounted for 67-68% of India’s smartphone shipments in the July-September quarter, according to estimates cited from Omdia and Counterpoint. Omdia placed their share at 68%, down from 71% in the preceding quarter and 75% a year earlier. Counterpoint estimated the share at 67%, the lowest since the first quarter of 2019.
Indian brands moved in as rivals trimmed their cheaper product lines. Their combined share reached 7% in the September quarter, up from 2% a year earlier and the highest level since the December quarter of 2018. Lava and Ai+ accounted for almost 95% of the contribution from Indian brands, according to Counterpoint research director Tarun Pathak.
That gain needs to be read alongside the condition of the overall market. India’s smartphone shipments fell 20-26% year-on-year to 35.8 million units during the quarter, a decade low, as rising prices encouraged consumers to delay upgrades. Domestic brands are therefore gaining share in a shrinking market rather than benefiting from a broad rise in household spending.
This distinction matters because market share can improve for two very different reasons. A company can win customers because its products are becoming more competitive, or because larger rivals have temporarily withdrawn from a segment. The evidence in the current quarter points to both forces being present, but it does not establish that Indian brands have already solved the deeper problems of product development, distribution and service.
The cost shock has been particularly significant for budget devices. Memory components can account for around 40% of the bill of materials of a budget smartphone, leaving manufacturers with limited room to absorb higher input costs. Vivo, Oppo and Xiaomi have responded by reducing the number of entry-level models, cutting specifications and prioritising mid-range and premium handsets, where margins are stronger.
For price-sensitive consumers, this has narrowed the range of attractive devices below the higher price bands. For Indian brands, it has created a gap that was previously difficult to enter because Chinese companies combined scale, aggressive pricing, frequent product launches and extensive retail networks.
Ai+, launched in July 2025, is one of the clearest new entrants. Its founder and chief executive, Madhav Sheth, told ET that the company had sold as many handsets in the current quarter as during the whole of the previous year. Its devices are priced between Rs 10,000 and Rs 25,000, and Omdia’s estimates indicate more than fourfold year-on-year shipment growth in the September quarter.
Lava’s experience illustrates both the opportunity and the pressure. Its entry-level 5G smartphone, initially priced at Rs 7,999, rose to Rs 14,499 as component costs increased. The company has said it is adjusting component choices, optimising software and sourcing strategically to manage the impact. It has also reported that sales more than doubled in the current financial year.
The price increase shows why a temporary retreat by Chinese competitors is not, by itself, a durable advantage. Domestic brands must still offer a combination of affordability, performance and reliability while absorbing the same global component pressures. Winning a customer with a low price is different from persuading that customer to buy the next device from the same brand.
Other consumer electronics companies are testing the same gap. Mivi and Boltt entered the sub-Rs 15,000 smartphone segment through Flipkart during the September quarter. Noise and boAt have been exploring a possible entry, while Karbonn is planning a festive-season relaunch and Micromax is evaluating a return to smartphones. These plans may expand competition, but discussions and proposed launches should not be treated as established market positions.
The current opportunity also differs from the previous period of Indian handset strength. Around 2015, Indian brands held roughly 35% of the domestic handset market, with Micromax, Lava, Intex and Karbonn competing against Samsung. Their decline was not caused only by aggressive Chinese pricing. Xiaomi, Vivo, Oppo and Realme paired large-scale procurement with fast product cycles, heavy marketing and extensive retail distribution. They also improved the hardware and software delivered at each price point.
Indian companies struggled to match that pace and lacked the scale to spread research and development costs across millions of devices. Their combined share fell below 1% in the early 2020s. The lesson is that assembly capacity and a domestic label are not enough. A competitive handset business requires product engineering, software capability, component integration, marketing, retail access and dependable after-sales support.
India’s industrial base is stronger today than it was during the earlier decline. The country is now the world’s second-largest mobile phone manufacturing base by volume. Mobile phone production reached Rs 6.27 lakh crore in 2025-26, compared with Rs 18,000 crore in 2014-15. Exports rose to around Rs 2.59 lakh crore from approximately Rs 1,500 crore over the same period.
Production-linked incentives have helped attract factories, suppliers and manufacturing expertise. Contract manufacturers such as Dixon Technologies produce phones for international brands, while the expansion has also supported manufacturing by companies including Apple and Samsung. This provides Indian brands with a deeper industrial ecosystem than their predecessors had.
But the growth of manufacturing in India has benefited foreign brands as well. The central policy question is therefore not simply how many phones are assembled domestically. It is who owns the product design, intellectual property, software, component relationships and consumer brand associated with those phones.
The government’s Rs 62,500 crore Mobile Phone Manufacturing Scheme, announced in August, attempts to address that gap. Its brand-focused segment offers eligible Indian companies a 5% incentive on qualifying sales, an additional 3% for Indian design and research and development, and up to 1.5% for domestic sourcing of key components and sub-assemblies. The programme is scheduled to run from FY2026-27 to FY2030-31.
Its eligibility conditions focus on Indian ownership, management control, intellectual property, trademarks and in-house design and R&D capabilities. That design reflects a shift in policy emphasis: from attracting production alone to encouraging Indian companies to retain more value from the products made in the country.
Lava is among the potential beneficiaries. The company has survived the earlier industry shakeout and plans to invest around Rs 1,100 crore over five years in display modules, camera modules, printed circuit boards and enclosures. Micromax’s manufacturing arm, Bhagwati Products, remains part of the wider ecosystem through plans for new facilities in Greater Noida with Chinese original design manufacturer Huaqin.
The effectiveness of the policy will depend on whether incentives support capabilities that remain valuable after subsidies end. The R&D component may be more consequential than a direct sales incentive if it helps companies improve industrial design, camera processing, software updates, quality control and component integration. The supplied evidence, however, does not yet establish whether the new scheme has produced those outcomes.
Scale remains an immediate constraint. Omdia estimates that smaller domestic brands are shipping only around 300,000-500,000 units per quarter. Reaching a larger and more stable customer base will require inventory reliability, wider distribution, sustainable retail economics and service availability across markets. Online-first sales can reduce some costs, but smartphones remain products where buyers assess durability, camera performance, software support and repair access.
The competitive structure is also unsettled. Chinese brands have not disappeared from India, and their lower share partly reflects current component costs and product decisions. They could regain ground if memory prices ease or their strategies change. Samsung and Apple continue to benefit from stronger premium positioning, leaving domestic companies exposed at both ends: scale advantages in the budget segment and brand advantages in the premium segment.
The bigger urban and industrial question is whether India can move from being a location where phones are made to an economy where technology products are conceived, designed, financed, marketed and repeatedly purchased under Indian ownership. That transition cannot be measured by factory output alone. It will also be visible in the depth of the supplier base, the quality of domestic R&D, the resilience of component sourcing and the trust consumers place in local brands.
The current numbers confirm that Indian smartphone brands have found an opening. They do not yet confirm that the opening is permanent. The next evidence to watch is whether Lava, Ai+ and other domestic companies can grow beyond their present shipment scale while maintaining product quality, distribution and service, and whether the government’s brand-focused incentives translate manufacturing expansion into durable technology capability.
