Market estimates suggest that India has become the world’s second-largest smartphone shipment market in terms of volume, accounting for 15.5 per cent of the total global shipment. In terms of value, India is also the third-largest smartphone shipment market, constituting 12.3 per cent. With 659 million users, India stands second only to China in the number of smartphone users worldwide.
Smartphone production is a highly resource-intensive process requiring several critical metals, including nickel (in microphone, casing, capacitors and electrical connections), lithium (in batteries), lead (in solder joints) and copper (in circuit boards). The 2024 Digital Economy report by the United Nations Conference on Trade and Development highlights that approximately 80 per cent of the total greenhouse gas (GHG) emissions from a new smartphone device are generated during the production process. Given India’s hegemony in the international smartphone market, it must take the lead in exploring options to cut down on the carbon footprint of its burgeoning smartphone industry.
One option that India can explore in this regard is creating a robust ecosystem for second-hand phones, which can be further segmented into “used” and “refurbished” phones. The former refers to selling the device as is, more often than not without guarantees, by previous owners; while the latter is a pre-owned device that has been restored and tested by the original manufacturer or a certified refurbishing company. Studies further indicate that second-hand smartphones can help cut up to 91 per cent of their environmental impact annually since they prevent the extraction of around 82 kg of raw materials and the emission of 25 kg of GHGs annually. In terms of usage, Vodafone Institute’s 2024 study finds that if a smartphone is used for two and a half years, around 209 kg of carbon dioxide will be generated against 112 kg of carbon dioxide when a smartphone is used over a period of seven years.
Further, second-hand smartphones not only serve as sustainable alternatives but can also prove to be smart business models given the burgeoning demand for used devices. An interesting model that is gathering momentum in this regard is “product-as-a-service” and “accessories-as-a-service”. Under this model, customers can meet their needs without the burden of ownership under a subscription while original equipment manufacturers (OEMs) own and maintain the product.
Creating a robust second-hand smartphone industry
The success of the second-hand smartphone device market depends on several factors. First, extending the shelf life of a mobile device is the basic foundation for the success of the second-hand device market. After initial inception and design, a mobile’s lifespan begins from production to dismantling and recycling. The inception and designing stages are particularly critical to enhancing the shelf life of a device. At this stage, OEMs can make decisions such as using recycled materials to allow optimal resource efficiency, adopting the principles of modularity and establishing long-lasting update strategies. For instance, a smartphone’s battery is typically meant to last two to three years (300-500 charge cycles), after which the battery capacity falls by roughly 20 per cent. Thus, as per media reports, Samsung is working on a solid-state battery, Betavolt Technology has launched a new nuclear battery that can power a smartphone continuously for 50 years, Honor has unveiled a new higher-capacity battery technology that uses silicon carbon, Huawei has filed a patent for sulphide-based battery, and Apple has ventured into in-house battery production to curtail supply chain dependencies. Other innovations in this space being explored include self-healing and energy-harvesting batteries.
Moreover, fostering a solid environment for future repair and refurbishment is equally important. In mature smartphone markets like India where new smartphone models are introduced regularly, device repair might present a conflict of interest. At the same time, original gears are expensive, which makes repairing with original part replacements not cost-efficient. Opening up discontinued product lines could spur innovation to bring down costs in this domain. Avoiding manufacturer-exclusive parts pairing and entering into flexible partnerships between suppliers and repair providers are other solutions that can be explored. For instance, in April 2024, Apple announced that iPhones can now be repaired at independent repair shops using recycled Apple parts, without jeopardising the device’s performance or safety features, while Samsung is opening up more repair centres and making genuine spare parts and repair kits available to its customers in India.
Further, for business models like products-as-a-service to function seamlessly, OEMs need to be adept at next-generation technologies. These include predictive analytics to foresee potential failures and remote-controlling software in case of any service disruptions to resolve problems from a distance without violating the user’s privacy. Enterprises could also keep track of device usage to tailor their service offerings.
Another supply chain challenge is the current dominance of the unorganised customer-to-customer sector in second-hand smartphone sales. This also raises concerns related to cybersecurity among consumers as they may not necessarily know how they can remove personal data from their devices. To tackle this menace, collaboration between e-commerce platforms and smartphone brands has been growing to prevent any leakages. In addition to vendors like Amazon and Flipkart, refurbished phone sales platforms like Cashify, Yaantra, ReFit Global and InstaCash are some of the players gaining traction in India. To prevent the sale of used phones in unorganised markets, ReFit has come up with a centralised application system for its partners, while other e-commerce vendors are offering up to a week for customers to send in their old phones after they have bought new devices.
On the demand side, overcoming customer inertia and prior stigmas about getting a substandard device can be challenging for OEMs and retailers. Usually, potential customers consider parameters like a second-hand device’s age, performance and condition; its compatibility with network carriers and response to software updates; and price and seller reputation to prevent purchasing a phone with legal issues or pending bills ahead of making a purchase. Rolling out incentives like phone buy-back programmes, trade-ins and rebates on the sale/purchase of second-hand devices can address these issues. Educating consumers about the importance of sustainability is another key to unlocking the success of the second-hand smartphone industry.
Testing refurbished smartphones and providing certificates for quality-tested smartphones can also help customers build trust. For example, Cashify has dedicated refurbishment centres, warranty policies and nationwide service centres. The company witnessed a whopping 444 per cent rise in its refurbishment revenue in FY 2023 (driven by Apple – 51.7 per cent – and Xiomi – 15.7 per cent). Further, its recent consumer behaviour survey states that 36 per cent of its respondents prefer to upgrade their phones every three years and most consumers opt for refurbished phones as they are almost new but come at a fraction of the cost.
However, as the demand for 5G devices is expected to pick up in India amidst the emergence of new use cases, there is a possibility that the sale of 4G devices might fade over time, leading to the creation of massive e-waste. However, one way to convert this challenge into a business opportunity could be exporting repurposed devices to emerging markets like Africa and the Middle East, where a particular model is currently not very easily available or affordable.
Conclusion
The international market for used smartphones is projected to reach 431.1 million units in 2027. Parallelly, India’s used smartphone market is projected to grow at a CAGR of 8 per cent to 26.5 million units per annum in 2028, while its refurbished smartphone market is poised to grow to $10 billion by 2026. Factors such as the growing awareness around sustainability, the influx of new premium phones and rising phone costs, and the need for affordable upgrades are driving the demand for second-hand smartphones. Meanwhile, retailers in the country can earn up to 10 per cent profit from a used phone against 5 per cent from a brand-new phone by
nudging potential customers to make climate-smart choices.
The rise of the second-hand smartphone market in India highlights a critical intersection of economic growth and environmental stewardship. By nurturing the development of a robust ecosystem for used and refurbished devices, India’s burgeoning second-hand smartphone industry can kill two birds with one stone – minimising its carbon footprint and exploring new streams of revenue. That said, the second-hand smartphone value chain, including OEMs, mobile phone repairers, network service providers, used and refurbished device retailers, and end users, must overcome their own set of barriers for the success of this industry. Extensive research and development, strategic collaborations between stakeholders, robust warranty systems and incentivising second-hand device use are some ways to mitigate these challenges.
