Homegrown firms enter budget smartphone market as memory chip prices rise

Kolkata: India's budget smartphone market is set for a fresh wave of homegrown challengers as a sharp surge in memory chip prices forced global players to pare their presence in the sub-Rs 20,000 segment, creating an opening for the local companies.

After wearable brands Mivi and Boltt entered the sub-Rs 15,000 smartphone market through Flipkart, rivals Noise, boAt and GoBoult are also exploring entry into the category and holding discussions with e-commerce marketplaces, three senior industry executives said.

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The renewed interest follows early traction for brands such as Ai+ and Lava, while legacy players Karbonn and Micromax are also looking to capitalise on the opportunity.

Karbonn is planning a festive-season relaunch, while Micromax is evaluating a return to smartphones, encouraged in part by the government's recent announcement of financial incentives under the Mobile Phone Manufacturing Scheme (MPMS), the executives said.

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The new wave of Indian brands is betting on an online-first strategy to keep distribution and operating costs low, allowing them to price devices competitively against Chinese manufacturers and Samsung at a time when affordability is under pressure.

"Being an Indian brand, there are no royalty and profit pressures from overseas headquarters. So, pricing power is in our hands," said Madhav Sheth, founder and chief executive of Ai+ smartphones. The company has already sold this quarter as many handsets as it did in the whole of last year, with devices priced between Rs 10,000 and Rs 25,000, he said.

"We have paved the way for other homegrown companies to enter and compete against global giants. However, this is not just an opportunity play. Indian brands have to focus on design, hardware, software and supply chain, as the entry segment is where 80% of consumers lie," Sheth said.

Micromax founder and promoter Rajesh Agarwal said the company was examining its go-to-market strategy for re-entering the smartphone business across price points and channels. "The MPMS scheme is an opportunity that will provide some benefits," he said.

The MPMS scheme provides incentive at 5% for Indian brands and an additional incentive of 3% for Indian design and R&D, apart from non-fiscal support.

GoBoult co-founder Varun Gupta said there are no plans to enter smartphones, while boAt co-founder Aman Gupta and Noise co-founder Amit Khatri did not respond to queries.

The opening has emerged as memory chip prices have surged, sharply raising the cost of making entry-level smartphones. Memory components can account for around 40% of the bill of materials of budget handsets, squeezing manufacturers' room to absorb higher costs without raising prices. Samsung, Oppo, Vivo and Xiaomi have reduced their exposure in the entry-level market as cost pressures mount, industry executives said.

Lava's head of product Sumit Singh said the price of the company's entry-level 5G smartphone had also increased from Rs 7,999 to Rs 14,499. Yet, Lava has sought to remain competitive by focusing on the core requirements of budget consumers, refining component selection, optimising software and sourcing strategically, he said. The company said its sales had more than doubled this fiscal year.