Technology

The Indian Smartphone Industry and the Impact of 5G: A 5-Year Forecast


The Deloitte TMT 2022 predictions represent the world we live in today and the future to come. It examines the role of COVID-19 as a catalyst for a number of emerging telecommunications trends, highlighting the lockdown-driven expansion of console games, streaming video services, health technologies and wellness, advanced connectivity for businesses and households, etc. This year’s forecast also sheds light on upcoming opportunities in the telecommunications sector, such as non-fungible tokens (NFTs), floating solar panels (flotovoltaics) to expand the renewable energy mix, innovative wearable technologies in healthcare healthcare, technology-enabled mental wellness solutions and sustainable smartphones. The Deloitte TMT Predictions 2022 also presents five-year estimates of India’s smartphone boom as well as the impact of 5G, highlighting the expected increase in smartphone sales in India due to increased 5G penetration.

India’s telecom sector has witnessed major changes in 2021 that promise to reset the growth trajectory and generate revenue for the industry. Recent measures proposed by the union cabinet have given a respite to the cash-strapped sector, encouraging investment in 5G equipment. The cabinet also approved a $1.62 billion (about Rs 12,600 crore) PLI scheme for the telecommunications and network equipment manufacturing industries.

India is expected to have 1 billion smartphone users in the next five years
In 2021, India had 1.2 billion mobile customers, with around 750 million using smartphones. According to our research, the smartphone market will reach one billion users by 2026. From 2021 to 2026, this growth is expected to be propelled by the rural sector at a CAGR of 6%, while the urban sector is expected to grow at a CAGR . by 2.5 percent. Increased Internet Adoption Should Fuel Smartphone Demand; this increased demand will be propelled by the need to embrace fintech, e-health, and e-learning.

New smartphones will account for 95% of all smartphone replacements in the urban market over the next five years
As consumer demand in India continues to surge, the market has demonstrated a fairly rapid replacement rate. In the urban sector, the average lifespan of a mobile device is three years. According to Deloitte’s estimate, 95% of replacements in the urban market in 2026 will be to new smartphones, while only 5% to used phones, compared to 75% and 25%, respectively, in 2021. rural is expected to show a similar trend where the average lifespan of a phone is four years. About 80% of replacements are likely to be new devices, while 20% will be used devices in 2026. As the number of smartphone users increases, it is expected that the replacement of feature phones with smartphones will eventually lessen.

5G is considered the fastest adopted mobile technology
According to Deloitte analysis, demand for smartphones in India is expected to grow at a CAGR of 6%, reaching around 400 million smartphones in 2026 from 300 million in 2021. This strong demand is expected to be mainly created after the launch of 5G , which alone will account for 80% of devices (about 310 million units) by 2026. 5G is believed to become the fastest-adopted mobile technology due to its various applications, such as high-speed gaming and remote health care. After the launch of 5G, additional smartphone shipments are expected to reach 135 million (cumulative) by 2026.

The smartphone revolution in India is expected to generate an expected total cumulative delivery of 1.7 billion smartphones over the period 2022-2026, creating a market worth approximately $250 billion (approximately Rs 19.39,700 crore ), of which more than 840 million 5G handsets are likely to be sold. over the next five years. From 2022, the penetration of 5G will increase year by year, resulting in increased sales of 5G smartphones in India. In addition, the recently announced $10 billion (about Rs 77,600 crore) incentive plan to boost semiconductor manufacturing in India and the strong support of governments for the BharatNet initiative in the recent budget releases to fiber the rural and remote areas by 2025 are guaranteed to boost smartphone sales in India. .

The author is a Partner and Telecom Sector Leader at Deloitte India.

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