The growing dominance of Chinese smartphone brands in India is becoming a concerning factor for domestic brands, who find it hard to compete and generate revenue and profits. According to the latest report, the biggest Indian smartphone brands have recorded record fall in revenue as compared to their Chinese rivals, who continue to flourish in India.

Veratech Intelligence reported that Micromax, Intex and Lava witnessed a steep 22 percent fall in combined revenue in FY18, whereas their Chinese rivals such as Xiaomi, Oppo and Vivo almost doubled compared to the previous financial year as their sales to reach Rs 46,120 crore. The Indian mobile phone companies took a major hit in revenue and profits as a result of aggressive competition from Chinese rivals.

Chinese smartphone brands like Xiaomi have competitive pricing in the budget and mid-range segment, attracting the masses with great value-for-money specs and features. India has become a key playground for mobile phone companies to drive sales and up their global ranking – after all, it is the second largest and one of the fastest growing markets in the world.

Xiaomi logo, representational image
Xiaomi logo displayed on the screen ahead of the product showcase event in New Delhi.KVN Rohit/IBTimes India

If the current trend continues, Indian phone companies' revenue will continue to decline in the next financial year as well. Subhash Chandra, MD of one of the leading mobile phone retail chains in south India – Sangeetha Mobiles, said the Indian phone brands are sandwiched between Xiaomi in the smartphone category and Reliance Jio in the feature phones category, the Economic Times reported.

Even though the top three Chinese smartphone companies witnessed record sales in India during FY2018, it is Xiaomi that emerged profitable with Rs 293 crore in its pocket while Oppo and Vivo reported a net loss of Rs 358 crore and Rs 120 crore, respectively.

In the case of Indian brands, top three phone companies reported massive losses in the revenue. Micromax posted Rs 4,345 crore revenue – a 22 percent dip compared to the previous year. The profits took a 72 percent plunge to Rs 103 crore for the leading Indian-origin smartphone brand.

Micromax electric vehicles
A Sri Lankan model shows an Indian-made mobile phone launched in Colombo during a late night ceremony May 26, 2010.Lakruwan Wanniarachchi/AFP/Getty Images

Lava's revenue dipped 10 percent to Rs 3,290 crore with net profit declining 46 percent to Rs 71 crore. Finally, Intex reported Rs 2,862 crore revenue in FY18, a 32 percent dip, but the company's profits plunged 90 percent to Rs 13 crore.

"The trend of Indian smartphone brands losing their market share due to strong competition from Chinese brands will continue in 2019. Still, Micromax and Lava are the only brands which can do well in the entry-level smartphone segment. Reliance Jio is another local brand to keep a close eye on," ET quoted Karn Chauhan, an analyst with Hong Kong-based Counterpoint Technology Market Research, as saying.