New Delhi, May 4 (IANS): India will overtake the US as the second-largest smartphone market next year, and local players, led by Reliance Industries, will benefit in the near term, says Morgan Stanley in its latest report based on a survey.

"Following our survey of more than 2,600 urban smartphone buyers in India, we raise our global smartphone unit growth estimate by one percentage point in each of 2017 and 2018," said the report.

"We model a 23 percent compounded annual growth rate for Indian smartphones through 2018 and the country should account for 30 percent of the global unit growth over the next two years and become the second-largest market next year in terms of units," it said.

It also felt Apple and Samsung to be better positioned in the long run.

"Reliance Industries is our play on the rising tide. In near term, many players should benefit from the 4G smartphone and network proliferation," it said, referring to the Jio service, the nation-wide commercial launch of which is expected later this year.

Morgan Stanley report said Jio is focused on 4G and has launched its own handset brand "LYF" that could bundle with SIMs and its voice and data plans. "We believe this could be disruptive to the market and expect Jio to gain 30 million subscribers in 2016 and 60 million in 2017."

The report also said while the high-end smartphone market in India is small, with only 6 million units at the $300-plus range, or 6 percent of the total, macroeconomic and demographic trends, and an appetite for 4G services, will lead users to upgrade to better smartphones over time. 

This apart, it also projected volume players like Foxconn and MediaTek to benefit. "We like FIH (Foxconn) which has exposure to many Chinese and Indian brands, while we think MediaTek will be challenged by pricing and margin pressure," it said.

"We expect the high-end market to unfold like it did in China, where Samsung and Apple dominate. Our survey indicates Samsung is leading in India with 46 percent user share and slightly higher purchase intentions," it said.

"Apple needs to build its brand as, surprisingly, half of survey respondents were not aware of the company. However, this means Apple has the most room for upside as our survey shows it could double share in the $400 segment to 40 percent," it said.

"We increase our total iPhone unit estimates by 5 percent and 4 percent in 201718 and 2018-19."