India is the world's second largest wearable market after China. Sometimes, it even surpassed China to become the largest market for smartwatches. But in Q2, shipments of wearables in the country suffered a year-over-year decline of 10% at 29.5 million units. The first half of the year declined 4.7% to 55.1 million units, according to IDC, an analyst firm, which revealed the details this week.

According to the analysts in the market, this decline can further intensify over the course of the remaining quarters, putting all the blame squarely in front of smartwatches' door.

According to the survey, India-based shipments of smartwatches diminished to 27.4 percent Year-on-Year to reach 9.3 million units in Q2 from nearly 12.8 million. Counterpoint separately confirmed with TechCrunch that it agreed according to its own analysis the Indian smartwatch market had fallen by as much as 30 percent Year-on-Year.

Earlier this year, it was reported that the rise of smartwatches in India had an unknown player. Established brands failed to gain differentiations in the market. A few of them have started diversifying into other segments like smart rings for revenues.
According to IDC, the share of smartwatches in the overall wearable market is down at 31.5% from 39% a year prior.

Innovation fatigue or hardware exhaustion is the prime reason why the smartwatch market in India is declining," said Vikas Sharma, IDC's senior market analyst for smart wearable devices. "Most local brands are launching models without any new features.".

Three Indian homegrown brands-Noise, Fire-Boltt and boAt- dominate the Indian market for smartwatches. All of them, however, saw a sharp decline in sales during Q2. There is an average selling price of smartwatches in India that fell to $20.6 from $25.6 last year as entry prices have been cut by several brands to clear inventory.
But the cut in prices have not helped bring in sales.

"Consumers are not warming up to buying a new smartwatch or replacing an existing one due to low differentiation in terms of features and limited innovation in the market," Anshika Jain, a senior analyst at Counterpoint, told TechCrunch.

Appeal of smartwatches primarily led to hyper-growth in smartwatches in the last few years in India; now that initial excitement in the segment has tapered off, she said.
"This is also reflected in dwindling growth rates and a bleak outlook," added Jain.

Advanced smartwatches, or those with an app store and a full-fledged operating system, are up 21.9% from last year, shooting their market share to 2.5%, compared with just 1.5%, reports IDC.
Apple and Samsung, however, saw a decline in quarterly shipments, with their respective market shares down by around 29% and 26%, the firm confirmed to TechCrunch.

Apple captured 0.5% share of the total smartwatches sold in India, while shipping some 35,000-40,000 units of the Apple Watch for Q2. Samsung took the remaining 0.9% share, said the firm, with 75,000-80,000 units shipped during the quarter.
Both of these companies saw their market share dip, but according to Sharma, that was cyclical.

It launched new watches toward the end of Q2 without any bundle offer; also, due to online sales, people usually wait for deals to come on higher price watches. Samsung had stopped the bundle offer for some time, said he [which previously charged its smartwatches to consumers at around $36 when buying with a flagship smartphone].

An analyst has also pointed out that the Apple Watch has become too old and hence the company has been clearing most of the old stock.

The overall advanced smartwatch segment saw an increase in its share as some Indian companies have announced new models running the Android OS. Those are full-blown Androids, not Wear OS, however, with the Play Store. Some companies have branded the devices as "WristPhones," as they also support voice calling via a nano SIM card slot.

However, IDC says the country will see a 10% YoY fall in annual shipments of smartwatches. Counterpoint too thinks the smartwatch from India will suffer a double-digit percentage drop this year.
The headphone shipments are steady
India saw flat headphones numbers, IDC said, but the nonsmartwatch decline in the category offset that for a total of 20.1 million shipped units in Q2 — that's 0.7% YoY growth. TWS expanded with 71% market share after outperforming YoY by 9.1%, meanwhile tethered or neckband-styled and over-the-ear headphones combined to stay at 5.8 million units, down 16.1%.

Domestic brands continue to dominate the market closely followed by Chinese smartphone vendors Oppo and its sub-brand Realme. On the other hand, Apple, and its subsidiary Beats as well as Samsung, which counts sub-brands JBL, Infinity, and Harman under its banner accounted for 0.9 percent and 2.3 percent of headphone shipments.
The decline is just a short-term phenomenon and there is still demand for TWS earbuds, Sharma of IDC stated while talking to TechCrunch. 

India also imports a significant amount of non-branded earbuds, and those sell both online as well as offline in retail shops. IDC does not factor them in, though.

"Q3 will be very big [for headphones] compared to Q2," Sharma said. Smartwatches, however, are unlikely to experience growth until at least 2026, Jain said:

"[Smartwatches are] unlikely to be good until at least 2026," she said. "In 2026 and beyond, we expect the market to recover, driven by newer use cases in smartwatches," she added.