India’s smartphone industry is heading into its toughest year in recent times, with shipments expected to fall sharply in 2026 amid a global supply squeeze, a volatile rupee and rising component costs.

According to preliminary data from research firm IDC, accessed exclusively by Moneycontrol, annual shipments are projected to decline 12–15 percent this year, a severe reversal from its earlier expectation of 4 percent growth. The downgrade comes on the back of a largely flat 2025, when the market inched up 0.5 percent to 152 million units.

Sharpest drop in years

If the estimates hold, 2026 will record a steeper fall than 2022, when shipments contracted 10 percent year-on-year to 144 million units, the lowest since 2019. The current downturn is being driven primarily by a global chip shortage that tightened toward the end of 2025.

Upasana Joshi, senior research manager at IDC, told Moneycontrol that India’s smartphone market is facing a “perfect storm” of supply constraints and macroeconomic pressures. “The supply crunch is not expected to ease until the first half of 2027. However, a recovery is anticipated shortly thereafter,” she said.

Android devices are expected to take the biggest hit, while Apple’s iPhones are likely to remain comparatively resilient with modest mid–single-digit growth, according to IDC.

High costs, higher prices

The supply squeeze is pushing average selling prices up across categories. The sub-$200 segment, which accounts for more than 55 percent of total shipments, is set to feel the most pressure, even as premium and mid-premium tiers continue to expand at a slower-than-expected pace.

Joshi said negotiating Bill of Materials costs will be critical for brands. Larger OEMs are better placed to manage rising input costs, but smaller players could face significant strain. Currency volatility is also expected to curb marketing and overhead spending this year.

Retailers brace for a ‘triple threat’

The first quarter of 2026 saw a flurry of high-volume and flagship launches, but retailers warn of a slowdown from the April–June quarter as shortages deepen and prices climb.

“All India Mobile Retailers Association chairman Kailash Lakhyani said, “The industry is facing a triple threat: consistent price hikes, artificial supply constraints, and a resulting delay in consumer buying cycles.”

He added that retailers are having to deploy more capital to secure inventory that is increasingly hard to access, while consumers are growing cautious amid rising ownership costs.

Industry watchers say the market is preparing for a “supply-starved” second quarter. Some brands are believed to be tactically holding inventory in anticipation of further price hikes to avoid losing money on older margins.

Also Read: Xiaomi India pivots to premium devices, ecosystem products in 2026 as smartphone volumes flatten

Brands push up prices to protect margins

Major smartphone makers, including Samsung and Chinese brands such as Oppo, Vivo, Realme and Xiaomi, have been raising prices since November, with increases continuing into February. More hikes are likely in the coming months, executives said.

Companies are being hit by rising component prices, particularly memory and storage, forcing them to increase device prices to protect margins and lift revenue. Several handset makers have lowered their sales volume targets by up to 20 percent and are shifting focus from volume-led growth to value-driven strategies.

Also Read: Average global smartphone prices cross $400 as revenues hit record high

First Published on February 25, 2026, 09:50:04 IST