A NYONE who has taken a trip on any of the Metros across India will be struck by one remarkable fact – almost 80 per cent of the passengers have a Bluetooth connection, a digital watch and a touchphone. All of them are less chatting on the phone and more watching reels/clips/videos and what have you. There is little conversation among those who are sitting, immersed in their world on their handsets. The chatter is for those who are standing, simply because of the inconvenience of viewing.
So it was no surprise to me when market research institution IDC India put out a report stating that by the end of this year, India is likely to be the number one market for wearable devices in the world.
For two reasons – lower prices and a phenomenal rise in penetration of these devices. The country is likely to have a humongous quarter-plus share of the global market. Another market research company, Counterpoint Research, put the figure at 27 pc. For the record, wearables include smartwatches, fitness trackers, and AR headsets.
Aspirational middle class
In real terms, the numbers and the data are mindboggling and reflect the aspirational nature of the Indian middle class and gen-next. It is anticipated that close to 504 million units of wearables will be shipped worldwide during the current financial year, of which India is expected to account for 130-135 million – around 26 pc. This is against the closer to 100 million units for last year that put India behind China and North America and accounted for one-fifth of the global sales of 492 million units.
There are some quaint terms used by research companies to identify trends. In the case of these astonishing sales of wearables are two phrases `lower penetration` and ‘attach rate’. What it means is that smartphones sold are lower in number and that penetration of these devices having exponentially grown is fuelling the need for `attach rate` – in other words, other devices that can conveniently attach or work in sync with the primary handheld touchphone. In a telling comment, Counterpoint Research said that in the subcontinent for every one smartphone sold, one smartwatch is also being sold.
IDC research manager Jitesh Ubrani said: “India has already surpassed the United States and China in terms of market size and will remain the largest market going forward thanks to the breadth of low-cost yet feature-rich devices from local vendors.” Incredibly, the country, already with the lowest average selling price in the entire region, will see the prices further drop.
Chinese industry hit
So what have these remarkable numbers meant for the Indian industry? The Economic Times, spelt it out in a detailed report: ‘’The surge in wearables manufacturing in India is impacting Chinese assembly lines adversely, with many factories in that country facing a sharply reduced order book.
Top wearables brands such as Boat and Gizmore are making most products locally in key categories audio and smartwatch through electronics contract manufacturers such as Dixon Technologies and Optiemus Electronics. “Because wearables assembly as a whole has shifted from China to India, most of the factories (in China) that were assembling truly wireless earbuds, neck bands and smartwatches are sitting without orders,” said Sanjay Kalirona, chief executive at Noida-based Gizmore.
“Earlier, we used to import completely built-up units (CBUs). But after the government imposed duties on wearables, we started importing them in semiknocked-down format, which is getting assembled here,” he said.
Design and fabrication
Going one step further, the process of creating an integrated design and fabricating the entire unit in India is now slowly picking up. Systematically, Indian companies dependent largely on Chinese IDH (integrated design houses) are ramping up their skills in this domain. This is one of the prime reasons why the Indian wearables industry—as opposed to the smartphone sector—has prospered and blossomed. Indian brands Boat, Noise and Fire-Boltt hold close to 75 pc of the market and close to 40 pc of these wearables are locally manufactured.
How did this dramatic change happen? It came with increased duties and the Government’s Phased Manufacturing Programme announced in April 2022. From almost all imports, the country will see close to 10,000 crore of manufacturing in electronic wearables this year. This is just one segment. There are other segments too that have shown dramatic growth, like CCTV. ’India’s smart home security camera shipments grew ’48 per cent YoY in Q1 2023. Indian brands now command nearly two-thirds of the Indian smart security camera market, with more than 60 pc of the products being manufactured in India, said Counterpoint. But that’s a story we will reserve for another occasion.
