Diwali smartphone sales revive budget phones—for now

As Diwali lights up homes across India, it’s also sparking fresh demand in the country's sluggish smartphone market. Budget 5G phones, priced under ₹15,000, are picking up pace, driven by discounts, exchange offers, and no-interest instalment plans. But analysts warn that this seasonal bump might fade just as quickly as the festive fervour.

Retailers across India are witnessing an uptick in smartphone sales in the sub- ₹15,000 range, as opposed to flagship devices being the only segment in demand of late. Once accounting for more than half of India’s smartphone market, budget phones have taken a hit over the past few years. However, the Diwali week has drawn budget-conscious buyers back into the fold, spurred by newly launched 5G devices with compelling features.

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Brands like Samsung and Vivo are capitalizing on the moment with aggressive offline promotions. 

“Most of the demand in the market for sub- ₹15,000 5G smartphones is not organic, which means the stagnation in the market is not going away anywhere,” said Manish Khatri, partner at Mahesh Telecom in Mumbai. “But in the past week, there is a clear uptick from buyers upgrading to 5G phones, who may have stalled their purchases to upgrade during the festive week.”

A retailer in Kolkata added that Samsung and Vivo have pushed discounts and exchange offers, making it possible for buyers to upgrade at a net expense of under ₹5,000. "These two brands have always had strong on-ground distributor networks, and are pushing more retailers to offer discounted deals and exchange offers to encourage users to upgrade to 5G devices at a net expense of less than ₹5,000. This is an attractive proposition," the retailer said. 

The specifications on most of these devices are good enough to last two years—buyers are seeing value in that, both Khatri and the retailer concurred.

Devices such as the Samsung Galaxy F15, Vivo Y28e, Redmi 13, Oppo A3x, and Realme C63—priced between ₹10,999 and ₹13,999—have seen strong uptake. The surge is further fuelled by instalment plans that break the cost into easy monthly payments of ₹1,200 or even lesser.

“If you can get a new phone in Diwali at a marginal expenditure, why would you not? That’s the rationale that most current buyers are coming with,” said Khatri.

A short-lived festive surge

Industry analysts, too, believe this demand surge is unlikely to extend beyond the festival season. 

“The latest wave in sales has been driven by Samsung and Vivo, capitalizing on their offline distribution networks,” noted Tarun Pathak, director at market research firm Counterpoint. “While there is clear demand for 5G smartphones under ₹15,000 right now, this is likely a short-lived spurt as buyers tend to make discretionary purchases during Diwali. Beyond the festive period, we expect a drop of up to 40% in overall smartphone sales heading into the next quarter, as buyer interest is likely to wane again.”

Pathak projects a mid-single-digit year-on-year increase in the total value of smartphones sold during the festive period, driven primarily by flagship models from Apple and Samsung at the outset. Despite the short-term rise in budget sales, Pathak expects the overall festive smartphone sales volume to remain flat compared to last year.

Smartphone sales in India have plateaued since the boom of 2021, when remote work and online education fuelled record demand. While shipment volumes have remained flat in the following years, 2023 saw single-digit growth in market value, driven by the increased sale of flagship devices.

Budget smartphones, once a dominant segment, have seen their share shrink from 51% of the market in 2019 to just 35% by volume in 2024. The market’s momentum now relies on the rise of premium smartphones, supported by easy financing options, reflecting a shift toward more discretionary spending.

The broader trend points to a shift away from budget phones. Before the pandemic, smartphones under ₹15,000 dominated over half of the market. But rising prices have changed that dynamic. Today, budget smartphones account for only 35% of the market, as average prices have climbed 80% to ₹22,000, driven by easy financing on premium models. Brands like Apple have thrived in this environment, setting sales records in India with each passing quarter.

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The short-lived budget smartphone boom highlights a critical shift in India’s smartphone market. While festival season deals offer momentary relief, the focus is increasingly moving toward premium devices—a trend that could define the market’s trajectory for years to come.