ASSOCHAM-KPMG: India to have 13.5% share in Global Smart Market by 2019


Thanks to digital revolution riding on the aggressively priced mobile data packages, India is expected to have a total number of 180 million smart phones by 2019 claiming 13.5 per cent of total global smart phone markets from 7.6 per cent at present, according to an ASSOCHAM-KPMG joint study.

India’s fastest growing market for mobile handsets globally contributed nearly 7.6 per cent to the global smartphone market in 2015 and is expected to touch 13.5 per cent by 2019 with increasing popularity of smartphones, better availability of data services etc.

With the advent of affordable smartphones (INR3,000 – INR10,000) designed for the Indian user from indigenous manufacturers, as well as increasingly low-cost data connectivity options, more people are shifting to smartphones and mobile Internet.

Out of a total handset sale of 30 crore units in FY15, smartphones contributed 11.40 crore units, i.e., 38 per cent. This contribution is projected to grow to above 50 per cent by 2020. Boost in smartphone penetration is expected to cater to m-enablement of a variety of services such as mobile banking, e-commerce, mobile health, e-agriculture and services to small and medium scale businesses.

With the urban penetration levels reaching saturation, the industry is looking at rural India for continued growth. As of February 2016, teledensity in urban areas was 153.93 vis-àvis 50.76 for rural India. Rural mobile phone subscriptions are already on the upswing. Nearly 38 per cent of rural population used mobile phones as of May 2015, up from 22 per cent in 2010.

Another key contributor to this growth is the decreasing price of feature phones as well as smartphones. The industry expects to leverage on the rural demand and assist the government in realising the digital dream.

The growth of Indian handset manufacturing companies has been nothing less than miraculous over the last five years. India manufactured 11 crore mobile phones worth INR 54,000 crore in FY16, showing a year-on-year growth of 83 per cent and 186 per cent, in volume and value terms, respectively. With the ability to provide feature rich yet affordable handsets, domestic manufacturers’ share of the handset market is slated to grow further. This will be further enhanced by the increased penetration of telecom services in rural India.

India is the fastest growing market for mobile handsets globally, growing at a CAGR of nearly 14 per cent in the last four years from 2011 to 2015. Additionally it contributed nearly 7.6 per cent to the global smartphone market in 2015 and is expected to touch 13.5 per cent by 2019. With increasing popularity of smartphones and better availability of data services, the landscape of the Indian mobile handset industry has witnessed a paradigm shift, adds the joint study.

Out of 235.60 million handsets shipped in 2015, 40 per cent were smartphones and are projected to constitute 60 per cent of total mobile handset sales by 2020. The smartphone shipments in India grew a healthy 23 per cent annually in Q1 2016 compared to the global growth, which stalled for the first time ever since smartphones first began to sell. The average selling price (ASP) of a smartphone was INR 12,285 in 2015 – a 25 per cent y-o-y increase.

Increase in Smartphone sales has changed the face of e-commerce industry in India in the last two years. Mobile transactions accounted for 41 per cent of total e-commerce sales in 2014. Developing a mobile (sometimes mobile only) strategy has been an important agenda for many of the leading e-commerce players in the country over the last two to three years.

India’s mobile handset industry is a key enabler for the government’s ‘Digital India’ initiative, launched in July 2015 to work together on a common agenda to transform the country into a digitally powered society and economy. Several international device vendors have set up manufacturing facilities in India, supporting the government’s ‘Make in India’ initiative aimed at boosting local manufacturing.

The mobile handset sector is a key component in the overall telecom ecosystem and a key driver of the digital revolution in the country. Along with immense growth opportunities, the sector also seeks support from policymakers to address following challenges that it currently faces.

India is the second largest mobile market with over a billion subscribers at the end of Feb 2016, with 608.4 million urban subscribers and 443.5 million rural subscribers. There is a huge potential to grow in the rural sector where tele-density is still quite low at 50.76 as compared to urban tele-density at 153.93.03. While the mobile subscriber base is still growing by under one per cent on a monthly basis, the number of landlines is gradually decreasing. Overall telecom density increased to 82.9 per cent by the end of Feb‘16.

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