According to the new report by JP Morgan, a strong pickup in the smartphone market is expected in the third quarter of 2017 driven by improved sentiments and inventory build up before the upcoming festive season.
The report said that the demand was soft in the Indian smartphone market in the second quarter (April-June) 2017 compared to the year-ago period, given the lack of clarity around GST implementation that "postponed the usual inventory build". Also, the demand was impacted on account of the slower conversion of feature phone users to smartphone users.
Likewise, Singapore-based market research firm Canalys has recently said that The Goods and Services Tax (GST), applicable in India from 1 July 2017 across all products and services, has adversely affected the market this quarter.
"There is general confusion in the entire market over GST and a lack of awareness about the changes that are needed. Apprehension among distributors and retailers regarding the impact on prices has caused the market to adopt a wait-and-see policy," said Canalys Analyst Rushabh Doshi.
Doshi said, "The market will emerge stronger post-GST. Vendors can look forward to cleaner distribution, faster delivery and increased demand from local retailers and distributors."
However, JP Morgan expects that smartphone growth will revive in the third quarter.
The research firm said, July-September quarter could see 25-30 percent sequential growth in smartphone units, implying a seven percent year-on-year growth.
The report noted that smartphones accounted for 45 percent of the total handsets in April-June quarter. It "may remain in the same range, affected in the short-term by the launch of the Rs 1500 ($ 23) Reliance Jio feature phone".