India’s smartphone market faced a third consecutive quarter of sluggish growth in Q2, but shipments are expected to recover in the current quarter as sales channels adjust to the implementation of a new goods and services tax (GST).

Just as the market started to recover from the impact of the removal of high-value currency notes from circulation to fight tax evasion, shipments slowed in the second quarter as vendors focused on clearing existing inventory, IDC said.

Smartphone shipments in the quarter inched up 1.6 per cent year-on-year to 28 million units.

Looking ahead, IDC said Q3 started slowly, but sales quickly recovered within a few weeks, leaving the market poised for its biggest quarter ever.

Jaipal Singh, a senior analyst at IDC India, said: “Sentiment is indeed positive in the market. All the ambiguities have cleared now, and vendors are gearing up for the upcoming [Diwali] festival season to recover from the slow start in the first half of this year,”

China-based vendors cemented their position with their combined market share rising to 54 per cent during Q2. Indian vendors, which have seen shipments decline for three straight quarters, captured just a 15 per cent share.

The top five
Samsung remained the market leader in Q2 with a 24 per cent market share (see chart below, click to enlarge), followed by Xiaomi (17 per cent), Vivo (13 per cent), Oppo (8 per cent) and Lenovo (7 per cent).

IDC said Samsung, which saw shipments fall 4 per cent year-on-year in the quarter, is facing pressure from China-based vendors in the mid-tier segment and competition intensified as vendors typically focused on selling through online channels have started to strengthen their grip in the offline segment.

Xiaomi’s Redmi Note 4 became the highest shipped smartphone in a single quarter in India, with shipments of more than 2 million units in Q2. Meanwhile, Vivo’s aggressive investments in above-the-line marketing activities paid off in terms of its overall market share, which stood at 4 per cent in Q2 2016.

Feature phones shipments remained flat at 34 million units in the recent quarter compared with the same period of 2016.