India is an interesting market for the global smartphone businesses large and small. One of the reasons why India is an interesting market is because there is massive potential for growth as much of the population does not have access to the Internet but this is changing. However, because much of India either has 2G GPRS / EDGE data coverage, or none at all, so the market is being developed at a very rapid page with the roll out of both 3G and 4G LTE networks. Also, whilst much of the population does not have access to the Internet, so many people do have access – and India has a busy smartphone and tablet industry. The Indian Government have also made policy changes designed to encourage investment into the country, including the “Make In India” initiative, which has seen smartphone businesses around the world rushing to invest in factories and offices in India so as to have their devices built and sold in the local market. One of the advantages to this is that should the device be manufactured in India, the business in question will be able to sell direct to customers using their own websites and e-commerce set ups. At this time, we are awaiting the Indian Department of Industrial Policy & Promotion to establish the exact definition of this, so that manufacturers in the process of establishing factories will understand if they are a qualifying manufacturer or not. It also means that those businesses having their devices built by an Indian contract manufacturer qualify or not.
However, because a business could sell a device online direct to Indian customers does not necessarily mean that they will do so. there are advantages and disadvantages depending on the individual business in question. Selling direct to customers can improve margins, which is useful for start up businesses that do not have an established distribution network and so will not need to create this from scratch: step forward OnePlus, for example, where the business has established a target of direct selling into India before 2016. Against this, India is already well served by online retailers, including Amazon, Flipkart, Paytm and Snapdeal, which have well developed inventory, warehouse and brand names. These businesses have been working on improving their infrastructure such as Flipkart’s improved mobile website. Furthermore, other businesses have spent considerable time, money and effort in establishing a distribution network and may not wish to compete with this.
In addition to OnePlus, other Chinese manufacturers such as Xiaomi could also benefit from the change and clarification of policy. India’s domestic smartphone manufacturers, which have worked hard in establishing their products, must be hoping that there are plenty of customers to go around.