India has over one billion mobile phone subscribers, making it the world’s second-largest mobile phone market.
However, it appears that development in internet usage in this enormous market has come to a standstill.
790 million wireless broadband customers were counted by the country’s telecom regulator in October of 2022. These are the people who access the internet on their mobile phones. That was just a hair over a million subscribers more than what was recorded back in August of 2021. After a meteoric rise into the double digits between 2016 and 2020 for the number of mobile internet subscribers, that growth has now slowed to the single digits.
Smartphones are the primary means by which people access the internet, and this segment of the market is experiencing stagnant growth. There are approximately 650 million smartphone users in India at the moment, but the rate of growth has halted. According to statistics from Counterpoint, a company that specializes in market research, the number of mobile phones sold dropped to 151 million units in 2018 after reaching a high of 168 million in 2021. This year it is anticipated that sales will increase by a single digit.
According to the findings of another market research company, IDC, customers were purchasing a new smartphone once every 14-16 months up until about three years ago. However, they are currently searching for an upgrade around every 22 months.
One of the reasons that smartphone prices have increased since the epidemic is because of growing component costs, a weaker rupee, and supply chain interruptions affecting China, which is the country that produces the most smartphones in the world. It is estimated that about 90 percent of the more than 300 components used in smartphones manufactured in India are imported.
A weakening economy, the loss of jobs, and the subsequent compression of earnings all imply that there is less money in people’s wallets to spend on a more expensive mobile phone. “The slowdown in internet growth should be considered as an indicator of the status of the economy,” says Nikhil Pahwa, a digital rights campaigner. “The slowdown in internet growth should be seen as an indication of the state of the economy.”
According to Navkendar Singh of IDC, the average price of a smartphone has risen from 15,000 rupees two years ago to roughly 22,00 rupees now. According to Navkendar Singh of IDC, the average price of a smartphone has risen from 15,000 rupees two years ago to roughly 22,000 rupees right now ($269 or £220). Right now, 0 rupees ($269 or £220). India is a country that places a high value on affordability, as evidenced by the fact that 80 percent of all electronic goods sold in the country have a price tag of fewer than 20,000 rupees. “This is a significant reason for concern. The market for mobile phones in the country with the second largest market in the world has a smartphone penetration that is not even close to that of China, which has the largest market, “says Mr Singh.
Some people, such as Anuj Gandhi, the founder of Plug and Play Entertainment, are beginning to speculate that the smartphone market in India has reached its saturation point. He asks, “Where will additional growth come from when there are still so many people living in poverty?” He is referring to the current state of the world’s economic situation.
There are around 350 million people in India who utilize “dumbphones,” also known as basic handsets or feature phones. These people have the ability to upgrade to smartphones if they have the financial means to do so. Nearly half of these individuals make use of technologies that have a purchase price of fewer than 1,500 rupees.
According to Tarun Pathak of Counterpoint, the number of Indians upgrading from feature phones to smartphones dropped to 35 million in 2022 as a result of increases in the cost of both the devices and the data they use. This is in comparison to the annual rate of 60 million upgrades that occurred before the advent of Covid. According to him, “the migration from feature phones to smart phones has slowed down dramatically.”
One thing that isn’t generally taken into account is a flourishing black market for pre-owned electronics, which could be meeting the demand for “affordable” cellphones. “The market for previously owned items is contributing to partially satisfying this demand. On the other hand, we are not truly expanding the base “says Mr Singh.
The fact that the growth of the internet is slowing down is not good news for India. Many people will have a more difficult time accessing government welfare payments, rations, and immunizations, among other things, if they do not have a smartphone. On the Unified Payments Interface (UPI), a platform for real-time cashless transactions that are supported by the government and uses mobile applications, more than 250 million transactions have been completed every single day so far in just this one month. The Reserve Bank of India envisions a society with “less cash and less cards” by the year 2025.
It is quite clear that there is sufficient opportunity for the continued expansion of both cellular phones and the internet. The rate at which rural residents are subscribing to wireless internet services has slowed. According to a study conducted by the Internet and Mobile Association of India and the data analytics company Kantar, the growth rate of active internet use – defined as those who have accessed the internet within the past month – “progressively reduced over the years” and reached its lowest point in the preceding four years in 2020. This was the lowest point in the preceding four years. The number of males accessing the internet via smartphone is growing at a faster rate than the number of females. A significant number of homes in rural areas continue to employ a single computer.
According to Mr Pahwa, the rise in the cost of mobile devices is not the only factor that is holding back the expansion of the internet. In order to be successful in rural India, most apps and services would need to overcome linguistic and literacy challenges. According to him, the majority of the content on the internet is still written in English, along with a few Indian languages.
There is a critical need for more creative solutions, such as the PayTM Soundbox, which is a battery-operated device that provides merchants with quick audio confirmation in 11 languages for every payment that is received through the payment app. According to Mr Pahwa, “We need more creativity if we are going to grow the internet in rural India.” However, before that can happen, sales of smartphones need to take up.