Offline smartphone sales in India experienced a significant downturn during the recent Diwali festive season, with unit volumes falling by 18 to 20 percent, according to the All India Mobile Retailers Association (AIMRA). The industry body reported that this contraction occurred over the four-day period from Dhanteras on November 6 to the day after Diwali on November 9. While the drop in units was steep, the overall value of sales remained broadly in line with the previous year because higher average selling prices offset the lower volume, Inc42 reported.
The primary driver of this market shift is the rising cost of components, specifically memory chips, which are being prioritized for AI infrastructure and data centers over consumer hardware. A recent Jefferies report cited by Inc42 noted that per-device memory costs have tripled to between $60 and $65, up from approximately $20 in 2025. To manage these increased expenses, smartphone manufacturers have raised retail prices in India by an average of 21 percent, according to Counterpoint Research. This price sensitivity has particularly impacted the budget segment, where consumers are shifting toward pre-owned devices or alternative brands like HMD and Lava to access higher specifications at lower costs.
Consumer behavior during the festive period also reflected broader economic caution. AIMRA observed that city-based buyers were less inclined to upgrade their existing devices, whereas lower-tier markets demonstrated stronger activity in the middle price range. Purchases were largely limited to the ₹30,000 to ₹60,000 bracket after discounts. Financing constraints further limited sales, with only 60 to 70 percent of loan applications approved due to tighter underwriting and credit score rejections, the association stated.
Brand performance varied significantly during the period. Apple, Google Pixel, and Xiaomi saw strong demand, with Xiaomi benefiting from competitive pricing. In contrast, Realme experienced a volume plunge of over 50 percent across regions, which AIMRA attributed to uncompetitive pricing and a lack of new festive launches. Looking ahead, AIMRA expects brick-and-mortar sales volumes to contract by as much as 50 percent over the next three months, as Deloitte projects the memory shortage could persist until 2030.