Will AI become the new value lever for India’s premium smartphone market?

India’s rapid AI adoption and interest boom is creating the foundation for the next phase of smartphone differentiation. As basic AI capabilities standardize, competitive advantage will increasingly shift towards integrated, personalized and agentic experiences – but greater AI autonomy will also raise the bar for consumer trust, transparency and control.

India’s premiumization journey creates a bigger role for AI

India’s smartphone market has steadily moved up the value curve, with average selling prices rising at an 11% CAGR between 1H20 and 1H26, from $171 to $316. Better financing, wider channel availability and increasingly competitive portfolios have made higher price tiers more accessible, supporting a sustained premiumization of the market. But as this transition matures and more consumers already own increasingly capable devices, sustaining premiumization will require vendors to create stronger reasons to aspire, upgrade and spend more on their next smartphone. AI can emerge as an important new lever in that equation – extending innovation beyond individual specifications towards experiences that become more useful, personalized and differentiated over the ownership cycle.

For consumers, that transition has already begun. AI today is largely about making familiar tasks such as search, photography, communication and productivity easier; over time, it can evolve from “help me do it” to “do it for me”, as more contextual and agentic experiences emerge. For vendors, the opportunity is to translate these AI experiences into stronger differentiation and a more compelling value proposition, particularly in the premium segment. Omdia’s Smartphone User Innovation Readiness research shows Indian consumers are already building these AI habits. The bigger question now is how the industry can convert that engagement into greater smartphone value, stronger differentiation and new reasons to upgrade.

AI has entered the purchase equation, but hasn't replaced it

Indian consumers still predominantly rely on familiar fundamentals such as value, camera, battery, performance and durability when buying their smartphones. However, as hardware improvements have become increasingly incremental and commoditization pressures are impacting hardware design, differentiation is shifting towards the overall experience a smartphone can deliver. A smartphone’s AI capabilities and features have not replaced these traditional purchase criteria. However, it has emerged as a critical factor moving up the decision hierarchy. The AI opportunity for smartphone vendors is to make the existing user experience better and create a stronger layer of differentiation through the interface.

The foundation is already taking shape. India has rapidly emerged as a major market for AI app adoption, providing an important signal of consumers’ readiness to engage with new AI tools and, eventually, more agentic experiences. By September 2026, ChatGPT had reached more than 227 million monthly active smartphone users, equivalent to around 32% of India’s smartphone installed base, while Gemini had surpassed 153 million, or around 21%. This scale of engagement indicates that vendors do not need to build consumer familiarity with AI from scratch – the opportunity is increasingly to translate that familiarity into differentiated AI experiences on the smartphone.

Yet much of this engagement remains application-led and relatively independent of the smartphone brand consumers own. The question is how this engagement evolves as chatbot interfaces and LLM capabilities become more deeply integrated into smartphone operating systems.

Figure 1: AI is already embedded in Indian consumers’ smartphone behavior

Today, consumers primarily experience AI through familiar activities such as creating and editing content, discovering information, searching, writing and translation – reflecting a combination of standalone AI apps and embedded smartphone features. In Omdia’s research, CREATE, DISCOVER and ASSIST remain considerably more established than ACT, indicating that smartphone AI today is still predominantly a “help me do it” experience.

The next phase could change where that value might sit. Moving towards agentic experiences will require AI to understand more of the user’s context, interact across applications and services, and reliably execute actions on their behalf. That brings the device, operating system and broader ecosystem much deeper into the AI experience. As AI becomes more agentic, the smartphone can therefore evolve from primarily being an access point for AI services to becoming an active part of how those services are orchestrated and delivered – creating greater scope for AI to differentiate smartphone brands and their ecosystems.

AI differentiation will increasingly move from features to experiences

As AI becomes more familiar to Indian consumers, its role in the smartphone value proposition can evolve from utility towards value creation. Omdia’s User Innovation Readiness research shows early signs of this shift. 43% of consumers expect their smartphone’s AI capabilities to improve through software updates, while nearly four in ten say useful AI could make them willing to pay more for a smartphone. The opportunity is therefore not simply to add AI to the specification sheet, but to make the smartphone progressively more useful throughout its ownership cycle.

The challenge is that individual AI features might become increasingly difficult to differentiate. Search, translation, summarization, image editing and content creation are already spreading across brands and price tiers. As these capabilities democratize, basic AI utility will increasingly become expected rather than differentiated. The premium opportunity will consequently shift towards more integrated experiences – combining personalization, user context and intelligence across applications, services and connected devices.

Figure 2: AI’s smartphone opportunity in India is about value, not just features

The longer-term opportunity is to bring AI deeper into the smartphone ecosystem. An AI experience that understands the consumer, learns preferences through continued use and works seamlessly across devices and applications becomes harder to replicate through individual features or standalone AI apps. Differentiation therefore shifts from having AI to how well the smartphone understands the user and how effectively it can act for them. If vendors can combine that capability with deeper personalization and ecosystem integration, AI has the potential to strengthen brand differentiation and give consumers a more compelling reason to remain within – and eventually upgrade through – a particular smartphone ecosystem.

Agentic AI raises the execution bar for smartphone vendors

The shift from AI that assists to AI that acts will require consumers to delegate more – from sharing personal context and granting access across applications to allowing AI to execute tasks on their behalf. Omdia’s research suggests the challenge is not convincing Indian consumers that AI is useful – only 4% identify lack of usefulness as a limitation. Instead, half cite privacy and security concerns, while 40% worry about becoming too reliant on AI. The challenge therefore shifts from convincing consumers to use AI towards earning their confidence to delegate more to it.

Figure 3: As AI moves from assistance toward action, trust and control become the next adoption barriers

For smartphone vendors, this puts greater emphasis on privacy, transparency, reliability and user control. Agentic experiences will need clear permissions, predictable outcomes and visibility into what AI can access and execute, without adding friction to everyday use. The next phase of smartphone AI will therefore be defined not only by the capability of the agent, but by how confidently consumers are willing to delegate to it. Vendors that can expand AI autonomy while preserving consumer control will be better positioned to translate agentic AI from technological capability into everyday consumer value.

Meet Omdia at India Mobile Congress 2026

The Omdia team will be in New Delhi for India Mobile Congress in October, meeting smartphone vendors, component suppliers, channel partners and other participants across India's technology ecosystem. We'll be discussing how component inflation, premiumization, financing, AI and changing channel dynamics are reshaping India's smartphone market heading into 2027.

If you're attending IMC and would like to discuss India's smartphone market and the opportunities ahead, get in touch with the Omdia team to arrange a meeting.

Figure 4: Omdia analysts at IMC 2026