Why Indian Smartphone Companies went out of the business

We all have heard the name of Micromax, Lava, Xolo, Karbonn, Spice and Intex. But, none of these companies is able to sustain in today’s smartphone market. Here is why Indian smartphone companies went out of the business.

All these companies were performing well before 2014. At least, they were not making a loss.

Just before three-four years from now, Micromax had beaten Samsung India to become a number 1 smartphone company in India. This was the time between 2013-2015.

Micromax and Karbonn were leading companies at that time. You may know many cricket series were sponsored by these companies.

In India, Xiaomi, Oppo and Vivo were just in the initial stage. The major companies who had captured the market were Samsung, Micromax and Apple.

Chinese companies work on the basis of economic of scale that means they manufacture millions of smartphone and eventually it reduces the cost of manufacturing. That’s the fundamental reasons Chinese companies sell smartphones at a lower price.

Xiaomi is leading smartphone market now in India.

BBK electronics is a parent company of Oppo, RealMe, Vivo and OnePlus. These four brands holds large portion of smartphone industry in India.

Also read: 11 Reasons How Xiaomi Become the Number 1 Smartphone Brand

Today, let’s understand what happened to the Indian Smartphone companies.

6 Big Reasons Why Indian Smartphone Companies Went Out of the Business

1. Innovation:

Indian smartphone companies didn’t innovate anything which is comparable with Chinese companies.

Micromax, Lava and Karbonn had enough money at that time to invest on manufactring plants, research and development.

They could have start their own software companies which develops the inbuilt innovative features.

But, these companies did nothing.

2. Focusing on PROFITS only:

Most Indian smartphone brands were operating on 20-30% profit margin. That’s a very huge compare to Chinese companies.

Indian companies just wanted to make money as quick as possible. But, this idea failed completely.

Xiaomi is still making less profit because they want consumers to love their product.

All the Chinese brands are operating their business on only 5% profit margin.

3. Low Quality Products:

Chinese brands such as Xiaomi, Oppo, Vivo and OnePlus started providing high-quality products at cheaper rates.

On the other side, Indian companies wanted to make more money by taking large profit margin. Also, the quality of Indian brands were so poor compared to Chinese brands.

4. Make in India:

We cannot blame the initiative taken by the government. Because of make in India, Chinese companies started creating assembling plant in India.

That decreases tax and transportation cost of Chinese companies.

Indian brands didn’t understand this fact. They continued manufacturing phones in China.

5. Chinese Manufacturing:

The harsh reality of Indian smartphone brand is they didn’t have any kind of manufacturing plant.

All the companies were buying phones from Chinese manufacturers. And then by giving the branding to the phones, they were selling phones in India.

Also Read: OPPO and OnePlus Vs. Xiaomi | Analysis

6. Reliance Jio 4G:

All Indian smartphone brands were expecting the arrival of 4G in India by 2018.

But, Reliance Jio rapidly spread 4G connectivity in the country.

Hence, Indian companies were not ready for 4G. Before taking any big decision, Xiaomi, Oppo, Vivo and OnePlus had already started capturing the market.

One Small Request:

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By Anuj Vohra

Hi , I am Anuj Vohra. Founder of Itsfacile.com & Saral Investment.

27 thoughts on “Why Indian Smartphone Companies went Out of the Business”
  1. You are absolutely right…
    But as we are now approaching foe make in India, how come as a citizen we contribute to India as most of the mobile companies are from China…
    Indian manufacturing companies should have to do something now….

    1. The problem with India’s manufacturing is no one wants to go with economics of scale. What that means is if we produce in a large quantity, we will be able to reduce the cost of Indian smartphone brands. That is not happening because os so many reasons.

  2. Hi Anuj,

    Very nice article. Simple and quite informative.
    We have a burning question right now though: “The Chinese smartphone manufacturers have so deeply captured the smartphone market that there seems to be no alternative to a Chinese brand, How does the Indian consumer focus on boycotting Chinese in terms of smartphone purchase at this point?”

    1. Hello Akshay,

      Thank you so much and I am glad you liked my article.

      Practically speaking, it is impossible to boycott Chinese smartphone companies. Let me tell you why. Most of the Chinese smartphone brands have assembly units in India that employees in India. Even if we start boycotting Chinese smartphones, we have only one option that is available in all the budget segment that is Samsung. And if we boycott Chinese products, there would be millions of people working in assembly unites. Chinese companies may fire workers. So, there would be a huge disadvantage for Indians.

      As of now, there is no alternative. Let’s see what happens within 2 years.

  3. Hi, I also have the same question as Akshay’s. Since 2 weeks I am searching for a good smartphone – made in India and Indian company. But been unsuccessful till now. All recommendations are for oneplus, xiomi etc which are Chinese. Since i need a smartphone soon, now I will search for one which is not chinese !!!!! Since searching for indian company didn’t take me far.

    1. Yes. As I said, as of now, we have only one option that is Samsung. However, there are still chances that Indian companies may take advantage of this situation.

  4. Hello anuj . It was a nice article.now i am studying b tech first year in Andhra Pradesh . My aim is to keep a mobile manufacturing company in India and give competition to Chinese brands.Actually my favourite brand is realme so i want to bring competition to that brand and as due to current crises i have decided to startup a Indian mobile company.As far now i have researched and gathered all information about why Chinese companies are leading and y Indian companies are failing.But only doubt still not clarified and got confused is how much money needed to startup a mobile manufacturing company in India i wish u could help me with this.I don’t need exact amount but approxiamate.

  5. In corona lockdown
    Many things created by India
    1.Reduce ventilator manufacturing cost.
    2.Cornoa testing method reduce time & cost.
    3.Glenmark favipiravir tablet for covid developed.
    Means if we take initiative .
    we will make 100% Indigenous parts mobile.within couple of months.
    Request to all in this field let us put efforts
    Definitely we will do .
    Jai Hind Jai Bharat

    1. Hello Amol,

      Yes. Indeed!

      During this unprecedented time, India has done outstanding work.

      This pandemic has opened eyes of 130 crore people about having the importance of Made in India products.

      Thank you so much for commenting. I really appreciate your feedback.

  6. Hi…I am impressed with your article…may be you have covered all the reasons but I would like to ask the audience that what difference will it make if
    1. Indian companies make phones in China then indirectly we are giving business to China so why should I buy an Indian brand
    2. If Chinese companies assemble in India and work on only 5 percent profit margin then why shouldn’t I buy from Chinese companies.
    What I’m trying to say is indirectly some business is definitely going to China…isn’t so?

  7. Nice article and very informative. If any indian mobile company see this article they can know their draw backs and can try to initiate new ideas to capture the market. This is the right time for indian companys. Because our people are ready to compromise with small draw backs of indian products. I am also searching inidan company names, but i failed. If government give a chance to our indian mobile manufacturers, they can catch the indian market from chineese products.

  8. Good article,and now micromax came to the market again with their latest smartphones let’s see how it goes..

  9. Thanks Anuj for your interesting article. I too have been wondering why Indian companies are unable to manufacture good mobile phones. Like Swapna, I too have been trying to find out if there is any good smart phone manufactured by an Indian company. It looks, for now, we have no any alternative to Chinese smart phones. Indian companies still have a long way to go to compete with the Chinese companies in terms of pricing as well as quality. Let’s hope, in the next few years, we have some highly innovative Indian companies manufacturing high quality mobile phones. All my good wishes goes to the the young generation of Indian start ups whole heartedly who plan to set up mobile phone manufacturing in India.

  10. It’s been tough question to understand that why there’s no indian company atleast trying overcome these drawbacks where they can establish a huge market and as mentioned without looking for profit we need to focus on users satisfaction and production has be valuable for with those specifications According current market as our shine brains think we can do wonders in establishing a indian mobile industry it’s tough time taking but the idea to develop to be independently establish our companies and focusing on R&D to think something inovative like to be unique in market which can satisfy a user and production requirement it can also be increased as we need to grow for better future putting ourselves down it can’t be the answer to our rivals we need to establish an indian mobile industry Innovatively I hope it has to come and support is must need.
    Dream for a new future .
    And your article is super good it’s very helpful and precious 🤗🤩

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