The gap between urban and rural areas in terms of digital access is growing as smartphone sales in smaller towns and villages stagnate around 35%-40% of total sales since mid-2021. This stagnation results from increasing prices and low demand for 5G devices.

What Happened? Research shows a drop in smartphone sales in rural areas due to weaker spending, while urban areas maintain high sales rates. As reported in an ET report, despite inflation, rural data consumption hasn’t declined.

In 2022, rural India bought 35%-40% of the country’s 122 million sold smartphones – a trend continuing into 2023’s first quarter, says IDC India.

However, rural areas accounted for only about three out of every ten 5G smartphones sold in the country in the January-March quarter. Navkendar Singh of IDC India notes that while the rural-urban split isn’t uniform, rural share growth has stalled since mid-2021.

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According to Singh, 2G and 4G feature phones still hold appeal in rural and suburban areas due to their lower cost and convenience over smartphones. In particular, less educated individuals find smartphones more complicated to use.

Contrastingly, urban areas see a rise in demand for 5G smartphones, leading to an all-time high average selling price of around ₹21,000, says IDC.

Additionally, the lack of 5G networks in villages limits the attractiveness of 5G handsets. "The limited use cases and higher ASP of 5G devices will restrict the growth of 5G handsets in rural areas for some time, despite network availability," Singh says.

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