Fresh off the announcement desk — not very long ago, India’s smartphone market was locked in a strangely entertaining race: who could launch the cheapest 5G phone first. Every other week, there seemed to be a new announcement from Lava, itel, POCO, Redmi, or Realme claiming to “democratise 5G” for India. The pattern became familiar very quickly: big battery, 90Hz display, a Dimensity chip, and just enough compromises hidden carefully behind the words “value premium-tier.”

For a while, the strategy worked brilliantly. As Jio and Airtel aggressively rolled out 5G networks, brands rushed to grab first-time shoppers before anyone else could. India was still a scale-first market back then. Margins were thin, but shipment numbers looked great in quarterly reports, and everyone seemed happy pretending that Rs 10,999 for a 5G smartphone was somehow sustainable forever.

Turns out, it probably wasn’t. Over the past year, affordable 5G phones have quietly started disappearing, or at least becoming far less affordable than they used to be. And no, this is not just brands waking up one morning and collectively deciding they want to become luxury labels overnight. The economics underneath the market are changing.

AI is making your affordable phone more expensive

Brand POV: OEMs have moved on from the volume wars

IDC’s Q1 2026 India smartphone market report is living proof that India’s smartphone market is shifting upward faster than many expected. The sub-USD 100 (around Rs 9,600) smartphone segment collapsed 59 percent year-on-year, with its market share shrinking from 18 percent to just 8 percent. I’m not sure if that is a slowdown or practically a market evacuation.

At the same time, India’s average smartphone selling price reached a record USD 302 (around Rs 29,000), growing 10.4 percent year-on-year. On another note, the premium segments are still expanding comfortably. IDC says the USD 400-600 (around Rs 38,000 – Rs 58,000) segment grew 29 percent year-on-year, while the USD 600-800 (around Rs 58,000 – Rs 78,000) category grew 32 percent. The easy explanation is “premiumisation.” The more accurate explanation is that cheap smartphones are becoming harder to build profitably.

A major reason is memory pricing. DRAM and NAND manufacturers are increasingly prioritising AI infrastructure and data centres because AI servers are simply more profitable than affordable Android phones. Right now, companies like Meta, Microsoft, and Google are consuming massive amounts of high-performance memory for AI workloads. Somewhere in this global AI arms race, the humble Rs 10,000 smartphone is basically losing a supply-chain bidding war to chatbots. That creates a problem for entry-level phones because margins there are already painfully thin.

Once memory prices rise, brands have only three options: raise prices, lower specifications, or quietly stop trying so hard in the ultra-affordable segment. Most companies are now doing a mix of all three. That is why phones that would have comfortably launched around Rs 10,000 during the early 5G boom are now appearing closer to Rs 14,999 or Rs 15,999, while still pretending to be “affordable.”

Honestly, somewhere, consumers themselves are partly responsible, too. Buyers today expect high refresh rate displays, fast charging, better cameras, larger storage, and cleaner performance even in affordable phones. Nobody wants a laggy 4GB RAM phone anymore, especially once apps and Android itself keep getting heavier every year. The era of “cheap but good enough” hardware is becoming much harder to sustain for brands.

A decade ago, brands like Xiaomi built their entire success story in the country on aggressive pricing. The Redmi Note series practically rewrote the rules of the mid-segment market. POCO became popular because it offered gaming-oriented hardware at prices competitors struggled to match. Realme expanded at breakneck speed through flash sales and specification-heavy launches. Now, as we look at the market in 2026, Xiaomi is talking about Leica cameras and Ultra phones. Vivo and OPPO are launching devices priced above Rs 1.5 lakh with the confidence of brands that no longer see themselves as “value players.” That’s where the profits seem to lie.

IDC adds online smartphone shipments in the country fell 14 percent year-on-year in Q1 2026, suggesting that aggressive discounts and flash sales are no longer driving the same demand they once did. Consumers are upgrading less frequently, replacement cycles are getting longer, and shipment volume alone no longer guarantees healthy profits. Apple figured this out years ago, Samsung followed. Chinese brands are now following the same roadmap, just with slightly more RGB lighting and larger batteries.

But it’s not like India itself has magically become a premium-first market overnight. Outside tier 1 cities, affordability still drives most purchase decisions. And, smartphones are no longer optional gadgets but part of the infrastructure. UPI payments, education apps, railway bookings, even government services, are increasingly demanding smartphone access. So, what happens now?

Cheap 5G phones are probably not disappearing completely. India is still too large a market for brands to abandon affordability entirely. But the definition of “cheap” is clearly changing. The Rs 10,000 5G phone may slowly become the Rs 15,000 phone. The Rs 15,000 phone may become the new mainstream smartphone. And the truly entry-level segment could gradually shrink into a much smaller category focused mostly on offline shoppers and first-time people.

Brands are also likely to shift their messaging away from pure specifications. Financing schemes, software support, battery longevity, and ecosystem lock-in may matter more over the next few years than simply launching the cheapest phone with a Dimensity chip inside it. For shoppers, this probably means one thing above all else: buy phones like you plan to keep them longer.

Ironically, India’s 5G revolution began with the promise of making high-speed connectivity accessible to everyone. But if affordable smartphones continue disappearing in the process, the next phase of the market may end up feeling a lot less democratic than the advertisements originally promised.