India's smartphone market is going ‘premium,’ but not entirely by choice

There's a flattering story being told about India's smartphone market this year. Buyers are trading up. Average prices are climbing. The country is finally moving past the era of throwaway entry-level phones.

IDC's Q1 2026 numbers say all of that is technically true. Shipments fell 4.1% to 31 million units, but the market grew 5.8% in value. The average selling price hit a record $302, up 10.4%. On paper, this looks like a market growing up. Look closer, and a different picture shows up—one where the budget phone didn't go away because buyers stopped wanting it. It went away because brands could no longer afford to make it.

The entry-level phone is being priced out, not upgraded out

The clearest sign sits at the bottom of the market. Phones under $100 fell 59% year-on-year. The segment's share dropped from 18% to 8% in twelve months. That isn't buyer behaviour. That's supply.

DRAM and NAND flash prices have surged roughly 90% since the start of the year. Memory now accounts for up to 20% of a low-end phone's bill of materials, and that figure could double by mid-year. The math of a $90 phone stopped working. Brands trimmed models, cut allocations, and shifted focus higher.

IDC senior research analyst Aditya Rampal described the moment as a "broader structural shift in the market, where brands may increasingly need to rely on product differentiation, financing offers, and premiumization strategies rather than price-led promotions to drive demand."

The buyers who used to shop the entry tier moved up a rung because there was little left below them. The $100-200 band absorbed the displaced demand, growing 10% to take 45% of all shipments.

Who held their ground, and who felt the squeeze

The brand table shows how unevenly the pressure landed. OPPO grew shipments 22% to a 15.3% share. Motorola added 14% and broke into the top five for the first time at 8.9%.

Samsung held flat at 17.1%, Xiaomi edged up 3% to 8.4%, and vivo kept the top spot at 19.6% despite a 4% dip. Apple slipped 5% to 9.4%, though the iPhone 17 alone made up 4% of every smartphone shipped in India—a single device doing the work of a small brand.

The hits landed lower down the list. realme fell 20%. Poco dropped 14%. iQOO lost 23%. OnePlus saw the steepest fall in the top ten at 32%.

These brands built their India businesses on online flash sales and tight sub-$150 pricing, and that playbook gets harder to run when component costs climb. Rampal noted that "aggressive discounting and channel-led promotional schemes remained limited, as rising input costs constrained brands' ability to stimulate demand through pricing interventions."

Online shipments fell 14% overall, and the channel's share slid from 42% to 38%.

Why the premium story is only half the story

Some of the shift higher is genuine. The $400-800 bands grew 29-32%, which is real money chasing better phones. But a good part of the value growth comes from budget phones disappearing, not buyers actively picking nicer ones. Fewer phones sold at higher prices isn't the same thing as upgrading.

The wider picture explains why this is likely to continue. The memory shortage is being driven by AI server demand for high-bandwidth memory, which has pulled supply away from consumer devices. Counterpoint expects a meaningful recovery only by 2028.

IDC senior research manager Upasana Joshi put it plainly: "With the global memory shortage expected to continue into 2027 and rupee depreciation adding further cost pressure, smartphone prices are set to rise further across segments. Consumers considering an upgrade may find better value in purchasing sooner, as pricing pressures are expected to intensify over the coming quarters."