Samsung or Xiaomi? It's a two-horse race for India's smartphone market

India's booming smartphone market is turning into a two-horse race between Samsung and Xiaomi.

The world's biggest smartphone maker and its fast-growing Chinese rival now account for 60% of the country's sales, according to a new report by research firm Canalys.

Samsung (SSNLF) and Xiaomi each sold nearly 10 million smartphones in India in the three months to June 30, a new record for both companies, Canalys said.

The new sales estimates reflect a big comeback for Samsung, which dominated the Indian market for six years but was overtaken by Xiaomi at the end of 2017.

The Chinese smartphone maker, whose cheaper devices have struck a chord with India's price-conscious consumers, widened its lead in the quarter to March 31. It also tripled its manufacturing base in the country by adding four new smartphone factories.

Related: How Xiaomi took India's smartphone market by storm

But Samsung's sales grew by 47% in the June quarter compared with the same period a year ago, its best rate of growth since the last quarter of 2015.

"Samsung is hitting back," said Canalys analyst TuanAhn Nguyen. "It has launched devices pitted directly against Xiaomi's capabilities."

Making more phones in India

The South Korean electronics firm is also responding by beefing up its own capacity to make phones in India. It opened what it claims is the "world's largest mobile factory" earlier this month on the outskirts of New Delhi.

Spanning 32 acres, the factory will allow Samsung to nearly double the number of smartphones it makes in India every year from 68 million to 120 million by 2020.

There are over 800 million potential customers in India for both companies — and others — to target.

The iPhone is still nowhere

India is already the world's second largest smartphone market behind China, with more than 300 million users. And despite the dominance of Samsung and Xiaomi, there are opportunities for other vendors, said Canalys research manager Rushabh Doshi.

Other Chinese smartphone companies are also making a big play for Indian customers. Xiaomi's smaller rivals Vivo and Oppo now have 11% and 10% of the market respectively.

One global brand that's nowhere in the picture? Apple (AAPL).

The iPhone has struggled to gain a foothold in India for years, where Apple has been prevented from setting up its trademark stores because of regulations requiring single-brand retailers to make most of their products locally.

It's also too expensive for the vast majority of Indians, whose average annual wage is less than $2,000.

Shipments of iPhones to India fell about 50% in the last quarter, according to Doshi. Apple has started making some older iPhone models at a new plant in Bangalore, but it still mainly caters to wealthier customers.

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