India's Entry-Level Vacuum Is Being Filled. Not With Cheaper Phones. With Lesser Ones.
A story in today's Economic Times pairs two words that should not sit together: "Mobiles with Low Specs Make a Comeback in Premium Mkt." The story explains it. The big brands have gone premium, and 2GB and 3GB RAM phones, a specification the industry buried three years ago, are back to fill what they left. The spec went back to 2023. The price went the other way.
The floor did not crack. It was removed.
In Q1 2026, #IDC has sub-US$100 shipments down 59%, share falling from 18 to 8%. In Q2, shipments fell 74.3%, and share collapsed from 15.6 to 4.5%. IDC told #ET the tier is fast becoming commercially unviable in the current cost environment.
India shipped 33.2 million smartphones in Q2, down 11.1 percent, putting Q2 2025 at roughly 37.3 million. By my arithmetic, that is about 5.8 million sub-hundred-dollar phones a year ago and 1.5 million now. Roughly 4.3 million phones a quarter did not get cheaper. They stopped existing.
Now set supply against demand. An industry veteran quoted by ET puts sub-₹10,000 demand at well over 40 to 50 million, mostly in smaller towns, against around 30 million for phones above ₹30,000. IDC's shares imply roughly 2.5 million sub-hundred-dollar shipments in Q1 and 1.5 million in Q2, a run-rate near 8 million a year. If that estimate holds, the bottom of the market supplies one phone for every five or six people who want one. That is a vacuum with a queue outside it.
The US$100 to 200 band needs care. In IDC's data, it did not fall; share rose from 39 to 45% in Q1, and in Q2 it held 46.8% on flat volumes, meaning roughly 41 to 42% a year ago. It did not grow. It stood still while the floor fell away.
In rupees, the damage shows one rung higher. #Counterpoint has sub-₹15,000 share falling from 41% in Q3 2025 to 33% in Q1 2026, and the segment down 45% YoY in Q2. IDC's dollar band hides it because its upper half absorbed buyers pushed up from below. So "to some extent" is exactly right: the vacuum is total below a hundred dollars and partial just above it.
The incumbents did not leave because they could not build the phone. They left because they could not afford to sell it.
Through 2025, the sub-US$100 tier grew 18% in IDC's data as brands absorbed rising costs. It was defended until defending it cost money. IDC called the Q1 exit a sudden pullback: brands withdrew models rather than sell at a loss.
Memory forced it. Counterpoint puts memory at over 45% of the sub-₹15,000 bill of materials, up from below 20% in a year. #Nothing's Akis Evangelidis said an identical CMF Phone 2 Pro would cost roughly 50% more to build, pushing an ₹18,999 phone to ₹30,000 to ₹35,000, so Nothing cancelled it. Carl Pei said Phone (4a) memory costs doubled between the build decision and launch, then doubled again.
That is economics. It is not purely economics.
First, the pool they chose. ET's veteran says most brands crossed ₹30,000 this year with hardware they sold for much less last year. That pool is around 30 million; sub-₹10,000 demand is 40 to 50 million. The incumbents left the larger pool to fish in a smaller, richer one. That is strategy, not a cost accident.
Second, allocation. Scarce memory goes where it earns most. #TrendForce warns brands may not even take bit volumes committed under long-term agreements. Nobody puts 8GB into a ₹9,000 phone when it fits a ₹30,000 one.
Third, access. ET's anonymous executive says 2GB and 3GB phones are returning because many brands cannot get enough supply and rely on smaller RAM chips just to keep operating. For a second-tier brand, the question is not what memory costs. It is whether it can get any.
Fourth, the harvest. Sub-brands built for these brands were starved first. IDC has #iQOO down 61% in Q2. #AIMRA says #OnePlus halted general trade operations from March.
Some incumbents stayed and downgraded. ET reports Itel announcing a 2GB RAM, 64GB handset this year, and #Lava selling an entry-level 4G phone with 3GB and 64GB. IDC has 4G rising to 11.1% of Q2 shipments as brands extended 4G models to dodge 5G memory costs.
The number that matters: per ET's executive, the last 2GB phone, launched in 2023, was priced under ₹6,000. Today 2GB and 3GB phones sell for ₹8,000 to ₹9,000. The buyer pays roughly a third to a half more for the same class of memory, on a phone the industry abandoned for poor user experience.
That is the comeback in today's headline. The incumbents did not abandon the shelf. They left a lesser phone on it, at a price that phone never commanded. Economics pulled the trigger. Strategy chose which way to run.
Google is putting AI on a diet because the hardware cannot gain weight
On June 4, #Google announced Gemini Go for Android Go devices. It replaces Assistant Go, runs on Android 13 Go edition or later with 2GB of RAM or more, and sits inside the Google Search app with no separate download. Google's flagship #Gemini Intelligence needs 12GB.
The obvious reading is funnel protection. The more useful one, shared by ET's sources, is that a Gemini built for 2GB signals 2GB hardware coming back. Google sent its newest assistant to the one tier that had emptied, just as 2GB and 3GB phones started restocking it.
Its real effect is permission. Once "AI-capable" stops being a spec-sheet privilege, a 2GB handset carries the same assistant name as a flagship. That lowers the reputational cost of downgrading and helps the incumbents cut specifications most of all.
The new brands are not beating the maths. They are selling a different phone at the old price.
The entrants sort into three camps.
The marketplace unknowns. ET names #Siavantage, #Oneme and #Zeno on #Flipkart and #Amazon: iPhone-like designs, entry-level hardware, no service map, no track record. These are the unproven brands Mr. Lakhyani of AIMRA says some sub-₹15,000 buyers now choose purely on price.
The pedigree entrants. ET's graphic flags wearable brands entering smartphones. #AI+, led by former #Realme India CEO, says it has sold over 2 million units with more than ₹2,600 crore of sales order value, about ₹13,000 a unit on its own figures. #Boltt is Fire-Boltt's spin-off, with an existing wearables customer base. #Mivi launches on Flipkart on September 26, has reportedly hired ex-#POCO India head and ex-#to be CMF business chief Himanshu Tandon as Chief Business Officer, and is tipped below ₹15,000. #Wobble comes from #Indkal Technologies, which also runs #Acer-branded phones in India and outsources manufacturing.
How do small brands undercut incumbents? Read a spec sheet. The Boltt Evo sells at ₹10,999 for 4GB/64GB, a 720p display, and a Unisoc T7250, which H2S Media calls a rebadged 12nm chip from 2022. The Boltt Ace 5G starts at ₹13,999 for 4GB/64GB, on a Unisoc T8200 with LPDDR4X memory and UFS 2.2 storage.
The brands with a name to protect entered one band up, at 4GB and ₹11,000 to ₹14,000.
The brands refilling the sub-₹10,000 hole are the ones with least to lose: incumbents willing to ship 2GB, and names buyers have never heard of.
The price is built from subtraction, not a secret supply chain:
Memory tier. 2GB or 3GB below ₹10,000, 4GB of older LPDDR4X above it, often whatever chips a brand can source.
Amortised silicon. Years-old chips cost less than current platforms.
Distribution. Online removes distributor margin, retailer margin, and the in-store promoter.
Borrowed awareness. Wearables brands bring recognition and a platform relationship. Unknowns borrow an iPhone-like design that does a marketing budget's job on a product grid.
No legacy. No ₹30,000 portfolio to protect, no parity promise to mainline, no base expecting 8GB.
Turnkey manufacturing. Contract design houses sell finished designs by the batch. No factory to fill.
The tell: the new brands are not immune. AI+ raised the Nova 2 5G by ₹3,000, the Nova 2 Ultra by ₹2,000, and the Pulse 2 and Nova 5G by ₹2,500 to ₹3,000. Lava raised the Agni 4 by ₹5,000. They found a cheaper phone, not a cheaper component.
Why online: it is cheaper to sell there, and nobody in mainline was waiting for them
Both are true, but not equally. Lower cost of sales is the reason brands give. The stronger reason is that mainline had no room.
The 2026 trade runs on rationed credit. AIMRA has advised retailers to buy stock in cash with independent bank financing, as distributors prioritise cash buyers for fast-moving models. As I wrote last month, retailers concentrate working capital on brands with sell-out visibility and financing support. A dealer who cut his shelf from eight brands to four does not add a Siavantage. AIMRA says mainline sales fell 30 to 40% in late August and a further 40 to 50% after September 1. Nobody in that position is prospecting.
The trade remembers #Micromax, #Karbonn, #Lava and #Xolo owning the counter, then losing it to faster Chinese product cycles, leaving dealers with stock, pending claims and customers asking where to get repairs. It remembers #HTC stopping India operations in July 2018. The customer who walks back in with a dead phone is the dealer's problem first.
Service is the real test of intent. Ai+ says it runs 106 authorised centres across 74 cities in South India, plans 100 more there, and has passed 1,000 service touchpoints nationally. That is a brand planning to be here in 2028. A marketplace listing with a support email is not.
Online was not the cheaper choice. For most of these brands, it was the only door that opened.
IDC has online shipments down 19.8% in Q2, share falling from 46.4 to 41.9%. By my arithmetic, roughly 17.3 million units became 13.9 million: around 3.4 million units lost online in one quarter, close to the size of the vanished sub-hundred-dollar tier. IDC names eroding entry-level availability as one reason.
Lose the sub-₹10,000 catalogue and a marketplace loses its first-time buyer and tier-3 funnel. ET confirms Flipkart and Amazon are refilling it with little-known brands. The risks to their name are structural.
The look promises what the hardware cannot deliver. An #iPhone-like phone at ₹8,999 wins the click, but by ET's account the industry abandoned 2GB phones because a demanding Android made them a poor experience. The buyer meets the spec sheet in week three.
The discovery is engineered. #H2S Media noted Flipkart showing the Boltt Evo at 44% off ₹17,999, against Boltt's own regular price of ₹10,999. The genuine launch saving was about 9%.
The terms protect the platform. One-year warranty, seven-day replacement, no cash on delivery, which filters out part of the tier-3 first-time buyers these phones target. The day-200 problem belongs to the brand, and if the brand is gone, to nobody.
Online stock travels. Offline allocation is local; an online unit can land in a town with no service centre for that brand. AIMRA has described online OnePlus stock bleeding into general trade through the grey market. If an established brand's stock leaks, an unknown brand's will.
And the complaint lands on the platform. First-time buyers do not separate seller from marketplace. The platforms are hedged. The customer is not.
The refurbished phone changes the entry-level equation
There is another competitor to the new ₹8,000–₹10,000 phone that the industry discussion is overlooking: the refurbished smartphone.
The entry-level consumer is not necessarily asking for a new phone. The consumer is asking: what is the maximum smartphone I can get for my money?
That creates a very different comparison.
At ₹9,000, a new unknown-brand handset may offer 2GB or 3GB RAM, entry-level silicon and a basic camera. A refurbished #Samsung, OnePlus, #Xiaomi, #Vivo or #a Motorola at roughly the same price may have originally been a ₹20,000–₹30,000 phone, with 6GB or 8GB RAM, a better processor, a better camera and a more established service ecosystem.
The choice is therefore no longer simply between one new brand and another.
It becomes:
New + lesser specifications + unknown brand
versus
Older + better specifications + established brand.
The economics are different too.
A new phone has to absorb today's memory and component costs. A refurbished phone is monetising hardware whose original manufacturing cost was incurred when memory and other components were cheaper. Depreciation has already done part of the cost reduction.
That makes refurbished smartphones a particularly interesting alternative at the bottom of the pyramid.
Premiumisation itself helps create the supply. Every consumer moving from one premium smartphone to the next releases an older, still-usable device into the secondary market. The more expensive the new smartphone becomes, the more valuable a capable older phone can look by comparison.
The refurbished phone has obvious disadvantages: battery health, cosmetic condition, remaining software support, refurbishment quality, and warranty vary substantially by seller. A badly refurbished device can simply replace one affordability problem with another.
There is another variable buyers should consider: software and security life.
A new ₹9,000 phone may be new in hardware but have a relatively short publicly stated update commitment. AI+ and Mivi have been reported with around one major OS upgrade and two years of security support, although disclosures are not equally clear across models. Boltt, by contrast, has announced three major Android upgrades and four years of security updates for its Ace 5G and Evo.
Established brands such as Samsung and Google generally offer much longer support on many current models. A refurbished established-brand phone therefore needs to be judged not just by its hardware, but by its remaining software-support life.
The real comparison is increasingly newer hardware versus longer usable life. Trust is therefore critical. Organised refurbishment can potentially change the proposition through certified grading, battery-health disclosure, warranty, replacement protection and dependable after-sales service.
This is why the entry-level battle may not ultimately be about who can manufacture the cheapest new phone. It could be about whether consumers prefer today's lesser new phone or yesterday's better phone.
#Techarc's survey suggests about 7% of planned festive buyers will buy secondary devices instead, adding roughly 6 million units to refurbished.
A new brand's real rival at ₹9,000 is not Redmi. It is a used Samsung.
Online can sell the phone. It cannot underwrite the buyer.
Counterpoint expects financing, across NBFCs and card EMI, to reach 42% of Indian smartphone sales in 2026, up from 35%. In mainline it already crosses half: in Q2, EMI was 57.5% of mainline purchases in Tier 2 cities, 55% in Tier 3 and below, and 41% in Tier 1. Lower online penetration pulls the national figure down, and Samsung leads in financed units.
The new brands' customer is the smaller-town buyer driving sub-₹10,000 demand, often new to credit. That customer increasingly buys on EMI, and EMI lives in the mainline. Card EMI online needs a card.
No lender or tracker publishes approval ratios or subvention rates by brand, and I will not invent them. But the lender's logic points one way.
Recovery. Business Standard reports the RBI has finalised a framework for when regulated lenders may remotely restrict financed phones, effective January 1, 2027. Lock-based recovery has historically needed the manufacturer's cooperation. When remote locking was halted, one collections startup saw smartphone loan defaults rise 20% month-on-month, Business Standard reported, citing the Economic Times. A new brand without certified lock integration is, to a lender, an unsecured loan.
Tightening. Consumer durable loans outstanding reached ₹1.19 lakh crore by May 2026 per Equifax data, and lenders are tightening approvals.
Subvention. "No-cost" EMI means the manufacturer or dealer discounts the interest, sometimes co-funded by the brand and retailer. A ₹9,000 phone whose margin went to memory has little left to sub vent.
My expectation: newer brands get financing last, with lower approvals, higher subvention demands, or larger down payments. The brands that solve lock integration and a lender panel before their second model are the ones worth watching.
Will more brands arrive before Diwali? Yes. Will they still be here next Diwali? Fewer of them.
ET's executive expects entry-level models to flood the market before festive, aimed at latent budget demand. Costs agree. TrendForce expects mobile DRAM contract prices up another 8 to 13 percent quarter-on-quarter in Q3, with Q4 increases converging but held up by capacity shifting to servers and HBM. Yogesh Brar sees no relief before Q1 2028; broader expectations put normalisation no earlier than late 2027.
IDC expects H2 shipments down more than 15%, a full year of 128 to 130 million, with limited festive discounting. Counterpoint's weekly sell-out fell for three straight weeks after the July online sales.
So the influx continues: Mivi on September 26, with more wearables, audio and unknown marketplace names behind it.
But the entrants' opportunity is the shortage itself. When memory normalises, incumbents return with 6GB or 8GB at ₹10,000, and a 2GB or 4GB phone becomes unsellable. An entrant without service, lender access, and a mainline foothold by then has nothing to defend.
The refurbished market creates another pressure point. When memory normalises and new-phone specifications rise again, older established-brand devices may become less attractive as refurbishments. But until then, the secondary market can absorb consumers who want better specifications than a new sub-₹10,000 phone can economically provide.
A GST cut is real money. It is not enough money.
On September 14, ICEA asked for GST on phones to fall from 18 to 5% at the next GST Council. Phones entered GST at 12% in July 2017 and moved to 18% in April 2020; pre-GST incidence was around 1% excise plus state VAT mostly at or below 5%. ICEA cites a 35 to 45% rise in entry-level prices, a fourfold memory cost jump, sub-₹10,000 shrinking to under 5% of supply, and an estimated 200 million Indians still on feature phones.
The arithmetic: 18 to 5 percent cuts the shelf price about 11% if passed through. An ₹8,999 phone becomes roughly ₹8,000; an ₹11,999 phone roughly ₹10,677. Against a 35 to 45% rise, the cut hands back a quarter to a third of what memory took. Relief, not a reset. It does not take a 2GB phone back to its 2023 price under ₹6,000.
Why better odds for this segment? AIMRA has asked for 5% below ₹15,000, and a price-capped slab is what a finance ministry can say yes to. IDC shows value rising as units fall, so the GST base has migrated into premium phones. A blanket cut gives away tax on iPhones; a capped slab does not. And the Council has said no once: ICEA pushed this during the 2025 GST restructuring and phones were left out.
Two complications. Inverted duty: the 2020 hike fixed input taxes exceeding output taxes. Cut phones to 5 percent with components at 18 and credits pile up again, which is why ICEA wants component rates rationalised. Price engineering: a ₹15,000 cap creates a very crowded ₹14,999.
The uncomfortable part: the cut helps whoever holds shelf and financing when it lands, at least as likely the incumbents with 4G portfolios and lender panels as online-only entrants.
Who pays, and when
Short term — festive 2026
Long term — 2027 onward
New brands
Real window: latent demand, incumbents gone, platforms want catalogue
Squeezed when memory normalises; survival needs service, lenders, mainline built now
Established brands
Margins protected, volume ceded
Tomorrow's ₹20,000 upgrader starts on another logo or a refurbished phone
Online channel
Catalogue refilled, GMV supported
Returns, reviews and service complaints attach to the platform; exited brands leave orphaned customers
Mainline channel
Loses a bottom it could not stock anyway
Becomes gatekeeper once new brands need EMI and service
Customers
A reachable price, from 2GB at ₹8,000 to 5G at around ₹14,000
2GB and 3GB age badly on today's Android; service, resale and continuity uncertain; a brand exit takes the warranty with it. Refurbished offers better specifications but introduces battery, warranty and software-support risks
Where this read could be wrong
The 40 to 50 million versus 30 million demand sizing comes from an unnamed ET source, not a tracker, and I have read it as annual. The 2023 price point is also anonymous. I have not verified Siavantage, Oneme, or Zeno specifications or volumes. New-brand volumes are company claims, and Ai+'s service figures come from a release carrying an advertorial disclaimer.
No one publishes NBFC approval ratios or subvention costs by brand, so the financing section is reasoning, not a dataset. IDC's dollar bands and Counterpoint's rupee bands are not like-for-like. Refurbished-phone pricing, grading, and service quality also vary significantly by seller, so the comparison with new phones is directional rather than a like-for-like market-price dataset.
If memory eases early, the entrants' window shortens, which strengthens the shake-out call.
The nuanced read
The consensus story is attractive: new and Indian brands stepping into space the Chinese giants abandoned, the Micromax era returning. Every part of it is visible, and every part is incomplete.
What is actually happening is less romantic.
The vacuum is being refilled from the bottom up, with 2GB and 3GB phones selling for a third to a half more than the last 2GB phone did in 2023, and unknown brands borrowing iPhone looks to sell them. Brands with reputations to protect went one band up to 4GB. The incumbents went to ₹30,000.
The customer pays 2026 prices for 2023 specifications, whichever logo is on the back.
But there is a second market forming underneath the new-phone market.
The consumer who cannot justify ₹15,000 or ₹20,000 does not have to choose between a new 2GB phone and no phone. They can increasingly choose a refurbished device that was once much more expensive and much better specified.
That makes the competitive landscape wider than it first appears.
The entrants building service, lender integrations and a route into mainline will have a better chance of surviving this window. The ones using a marketplace as their entire company face greater continuity risks. Refurbishers that can solve trust, grading, battery health and warranty can capture consumers without manufacturing a single new phone.
The vacuum therefore closes one of several ways: memory normalises, GST comes down, established brands return—or consumers decide that buying yesterday's better phone is smarter than buying today's lesser one.
A shortage does not create a market. It rents one out. And in this cycle, the landlord may not be another smartphone brand. It may be the secondary market.
The lease on this one expires the day memory gets cheap—or the day consumers stop accepting less phone for more money.
Sources
"Mobiles with Low Specs Make a Comeback in Premium Mkt," The Economic Times (September 16, 2026); IDC Worldwide Quarterly Mobile Phone Tracker, India Q1 2026 (May 2026) and Q2 2026 (via TelecomLead, Digit, IANS, August 11, 2026); Counterpoint Research via Forbes India (April 17, 2026) and Digit (July 18, 2026); Counterpoint Smartphone Financing Tracker (June 2026) and Business Standard (August 11, 2026); Counterpoint India Weekly Sellout Tracker (August 2026); Digit, "State of the smartphone industry 2026," citing AIMRA, IDC, Counterpoint, Techarc, CMR and Yogesh Brar (July 18, 2026); TrendForce mobile DRAM reports (May 14 and August 3, 2026); TechSpot and Tbreak on Nothing CMF (June 2026); PhoneArena and Gagadget on Gemini Go (June 5, 2026); Smartprix, 91mobiles and H2S Media on Boltt (August 2026); GSMArena, TelecomTalk and The Tech Outlook on Mivi (August 2026); The Tribune and Technosports on Ai+ (August to September 2026); Beebom Price Hike Tracker (August 2026); GSMArena on Wobble (November 2025); TechRadar on HTC's India exit; RetailIntel citing The Hindu BusinessLine on AIMRA (September 8, 2026); Business Standard on loan defaults (November 28, 2025); Whalesbook citing Equifax (July 7, 2026); IDFC FIRST Bank and Paytm Business on EMI subvention; ICEA via Semiconductor For You and Inshorts (September 14 to 15, 2026); Hindustan Times on the 2020 GST increase.
Unit conversions, supply run-rate, channel estimates, and GST calculations are the author's own.
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