New Delhi, Apr 23 (IANS): India's smartphone market grew just 2 per cent in the first quarter of 2022 owing to supply constraints, not a great start to the year for a market which has seen double-digit percentage growth even during the Covid-19 pandemic, a new report has said.

The biggest challenge this year will be maintaining device affordability in India, according to global market research firm Canalys.

"Oil prices in India are at an all-time high and wholesale inflation remains elevated, at 14.6 per cent in March. Volatility in foreign exchange rates and higher operational costs due to inflation will, in turn, put further pressure on vendors to maintain profitability," said analyst Sanyam Chaurasia.

Smartphone manufacturers shipped 38 million smartphones in India in Q1 2022, just 2 per cent more than a year ago, as the leading vendors suffered from intermittent supply issues.

"While most of the world's markets battled the third wave of Covid-19 in Q1, the relatively weaker impact on India should have helped it return to growth quickly," Chaurasia added.

"But supply remained the biggest challenge for the leading vendors aceand they struggled to secure components for their volume-driving low-end models".

In contrast, other brands did remarkably well with solid supply to take on the market leaders and fulfill the low-end demand in Q1.

"Vendors are certainly taking steps to address the supply bottleneck," said Chaurasia.

Channel companies are optimistic about healthy sell-in in the second quarter (Q2), with vendors preparing for a strong festive quarter.

The mass market will remain India's growth engine, and having a healthy portfolio in the mid-to-low-end segment will be key to maintaining strong consumer mindshare in 2022.

"Availability, affordability and attractiveness will be essential for smartphone vendors to succeed as multiple uncertainties lie ahead," said the report.