Multinational mobile companies such as Nokia, Samsung, Motorola and LG, who dominate the mobile handset space with over 75 per cent of the market share, might face a new challenge. This time it's not from Chinese unbranded products, which have been flooding the Indian market.

Indian companies such as consumer goods giant Videocon [Get Quote], B K Modi  owned Spice Mobiles, Usha Lexus, Delhi based Intex and Reliance Communications [Get Quote], are joining the bandwagon by leveraging their brands and offering warranties which are not available on the Chinese products. As many as over six million GSM phones are sold every month in India. This market is expected to grow further, with the entry of new players and telcos moving to rural areas.

The Indian mobile subscriber base is expected to more-than-double to 737 million connections by 2012, leaving a huge addressable market for all mobile handset vendors. The total subscriber base in India currently stands at over 300 million, of which rural subscribers amount to over 62 million, leaving a huge room for growth.

Indian companies are confident of taking on the big multinationals. The domestic companies are importing phones from countries such as China, Taiwan and Hong Kong, affixing their brand names, and offering warranties and after-sales services not provided by the non-branded Chinese products.

Videocon Industries [Get Quote], which already has a well established brand name, wants to leverage it and sell mobile phones.  The company plans to launch its GSM mobile phones around Diwali.

"In a couple of years, we will be able to compete with the multi-national companies. Most importantly, we have brand acceptability. Moreover, we not only have the infrastructure, but also service capabilities to go to every customer," said HS Bhatia, vice president and business head-GSM mobiles, Videocon.

The company, which has a pan India license to operate GSM, has the advantage of pushing its phones though bundled offerings to its customers-and get a ready-made market.

Videocon is a well established brand name. "We already have a brand recognition advantage, not only in urban areas but especially in tier 2-3 cities and small towns. Since people identify with our products, we can easily add this to our product offerings," says Bhatia.

There are others who see a potential in the smaller towns and rural India, a market which is open to everyone.

Says Ramesh Vaswani, executive chairman of Intex Technologies, "Multinational companies have established their brands, the Indian companies hence have to carve a niche for themselves, so though the mobile brands dominate the market, the rural areas and B and C class towns are still open for Indian players."

Intex which deals in mid-range phones costing over Rs 1,000-Rs 8,000 is looking to clock revenues of over Rs 40 crore (Rs 400 million) through its mobile business.  It also says that by buying in volumes it is able to get imported phones at a cheaper price.

Even Usha Lexus is looking at the rural market were they have a distribution chain. "There is huge potential and immense opportunities in the handset market in India, especially in the rural areas, and second and third tier markets," says an executive from Usha Lexus. The company sells about 40,000 units a month and expects to double this number in the near future.

RCom is leveraging its 3500 outlets WebWorld's or communication outlets to sell their mobiles which would also include GSM phones. "The trend now is to reach the bottom of the pyramid, semi-urban and rural areas are where the potential market lies," explained an RCom spokesperson. The firm sells "Classic' phones a brand which they have established for CDMA.

Even analysts say there could be a market for new players. Though there is not much of a difference in the prices of the foreign branded Indian manufactured phones and phones imported from China however the parts of the rural market are still virgin.

This will enable the newer players to garner their market share in this market, explains Ganesh Ramamoorthy, principal research analyst, Gartner.

Established mobile phone brands are however not alarmed by the entry of new players. Devinder Kishore, Director-Marketing Nokia says, "We already have our strategy for the rural market in place, we provide multi-lingual capabilities, our phones are rugged and affordable. However entry of new players is welcome, competition is always good for the market and the industry. But it is important to note that customers look for value and not only cost."