India’s smartphone market returned to growth in the first quarter of the year, expanding 12 per cent year-on-year, with more than 27 million units shipped, according to research firm Canalys.

Samsung held on to the top spot with its market share stable at 22 per cent after shipping 6 million units in Q1. Significant sequential growth saw Xiaomi and Vivo take second and third place respectively, while Lenovo moved up a place to fourth and Oppo fell back to fifth, Canalys said.

Xiaomi continued to grow rapidly, shipping nearly 4 million units in the quarter and taking a 14 per cent market share, up from 3 per cent a year ago, significantly narrowing the gap with market leader Samsung.

Canalys research analyst Ishan Dutt noted Xiaomi’s “success in India is underscored by its online go-to-market strategy,” which means a government plan to remove high-value currency notes from circulation “seems to have had no impact on it, as its target customer is young, internet-enabled and primarily buys online.”

Xiaomi co-founder and CEO Lei Jun in March said he expects sales in India to double this year to $2 billion. The company invested about $500 million in India in 2015 and 2016 and plans to match the investment in the country over the next three to five years.

Vivo shipped 3 million smartphones to expand its share to more than 10 per cent in Q1, with a 36 per cent quarter-on-quarter growth in shipments.

Mo Jia, Canalys research analyst, said Vivo’s strategy of focusing “on the highly fragmented ‘unorganised’ retail market is paying off.”

“Its ability to drive sales by investing in marketing campaigns has seen it displace local vendors that once thrived in this space.”

Local brands Micromax, Intex and Lava, which controlled almost 30 per cent of the market in Q4 2015, have all dropped out of the top five over the past two quarters.

Late in 2016 Indian mobile phone makers cut working hours and output amid a slowdown in device sales caused by the government’s so-called demonetisation initiative, with smartphone sales down as much as 35 per cent over the last few months of 2016.