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Phone prices rose 16 per cent, so brands pay your EMI interest

By Strota Newsroom · 2026-10-06 · How Strota reports

Phone prices rose 16 per cent, so brands pay your EMI interest
smartphone EMIno-cost EMIfestive seasonconsumer financeCounterpoint Researchhousehold credit
Samsung, Vivo, Xiaomi and Haier have stretched no-cost instalments to as long as 30 months and are carrying 8 to 18 per cent interest, because prices rose 16 per cent and buyers pulled back.

Smartphone and appliance brands have stretched no-cost instalment plans to as long as 30 months this festive season, six to eight months longer than usual, and are absorbing the interest themselves, the Economic Times reported on Tuesday. Samsung, Vivo, Realme, Xiaomi, Oppo and Nothing have done it even in entry and mid-range handsets, where instalments were shorter or were not offered at all. The reason sits in the price tags: phones have become dearer and fewer people are buying them, so the brands are paying to keep the sale alive.

The price move is measured rather than guessed. Counterpoint Research found that average smartphone selling prices in India rose 16 per cent year on year in the first half of 2026, taking the average to a record 318 dollars in the June quarter. The cheapest handsets carried the worst of it: shipments of phones priced below Rs 10,000 fell 65 per cent, and the Rs 10,000 to Rs 15,000 band fell 20 per cent, while phones above Rs 20,000 still grew, helped by trade-ins as well as instalments.

When the sticker rises and demand does not follow, financing stops being a convenience and becomes the route to a sale. Counterpoint expects financing, which covers NBFC loans, credit-card instalments and debit-card instalments, to account for 42 per cent of India's smartphone sales in 2026, up from 35 per cent in 2025. The same research puts about 67 per cent of financed phones in the hands of a non-banking finance company rather than a bank.

The brands have gone further than usual to make the monthly number smaller. Samsung is offering a 30-month no-cost EMI on its foldables and its S26 series for the first time, and an 18-month no-cost option on its A series; its Fold and Flip models can be financed over 40 months. Vivo is offering a 30-month no-cost EMI on its flagship and 24-month financing on its premium range. Xiaomi has rolled out schemes running up to 18 months. Appliances have joined in too: Haier has a 24-month no-cost EMI on premium televisions, and Godrej Appliances goes up to 18 months.

None of that interest disappears. In a no-cost EMI the brand pays the lender's charge instead of the buyer, and the Economic Times reported that the cost the brands carry runs from 8 to 18 per cent on no-cost schemes lasting 8 to 30 months, a range Haier India's chief executive gave. Stretch the loan past 30 months, and the interest on the market is a steep 24 per cent.

This is the part a household rarely sees. An instalment plan with zero interest is not free to arrange. A lender still wants paying for the money and the risk it is taking, and in a no-cost scheme the brand settles that bill. The charge does not vanish; it moves. It is why a scheme tends to arrive beside a price increase rather than instead of one, and why the finance cost is better read as a marketing spend than as a saving.

Counterpoint's research director, Tarun Pathak, put the choice facing handset makers plainly: hold prices and give up margin, or protect margin and give up volume. The brands have taken a third road, subsidising the purchase and hoping the volume returns once the monthly payment looks small enough.

The money behind the instalment usually comes from outside the banking system. Counterpoint found that about 67 per cent of financed phones are funded by non-banking finance companies, with Bajaj Finance the largest and TVS Credit next. In Tier 2 and Tier 3 cities, where bank card-based instalments are thinner, NBFCs are the ones filling the gap, which is also where the cheapest handsets sell.

Retail confirms the shift. Kailash Lakhyani, chairman of the All India Mobile Retailers Association, which counts more than 150,000 stores, called instalment schemes the single most vital growth driver for phone retail this festive season. Flipkart's payments head, Gaurav Arora, said instalments are already about a third of mobile, large-appliance and electronics retail, and the platform expects that to approach half for high-value electronics.

The dependence is sharpest away from the big cities. Business Standard, reporting Counterpoint data in August, said EMI penetration in Tier 2 city smartphone purchases had risen to 57.5 per cent in the June quarter, as brands extended financing tenures and higher prices pushed affordability to the centre of the buying decision.

There is a caution buried in the same research. Counterpoint's own survey found that hidden charges and unclear terms were among the main reasons people avoided financing, a point that matters because a longer tenure is sold on the size of the monthly payment and not on the total that will leave the account.

The instalment is not yet the majority route. Counterpoint's analysts note that one-time payments, cash and full card payments together still account for a slightly larger share of phone purchases than financing does. The premium end that held up did so on trade-ins as well as instalments, and the cheapest segment, where financing has arrived most recently, shrank the most.

What the record does not establish is whether the subsidy lasts. The 16 per cent rise in average selling prices and the 65 per cent fall in the cheapest band are measured facts; the willingness of brands to keep carrying 8 to 18 per cent interest is a decision they can reverse. Counterpoint expects memory costs, the component that drove prices up, to stay elevated through 2028. If that holds, either the tenures stretch further or the sticker price absorbs the finance cost the brands are covering today. Nothing in the scheme itself settles which it will be.

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This story was written by the Strota Newsroom from publicly reported and publicly posted sources, drafted with AI assistance and checked against automated editorial-quality and accuracy gates, with human editorial oversight. Individuals who shared their experience on social media are not identified. See our editorial standards, sourcing and AI-use disclosure. Found an error? Tell us — we correct transparently.