HMD’s entry into smartphones looks almost accidental on the surface. The Finnish phone maker, once synonymous with Nokia, is launching its first Android phone called the Vibe 2 5G at ₹10,999 (about $114). Nothing revolutionary there. But what comes preloaded on it might actually matter more than the hardware itself.
The phone ships with Indus, an AI chatbot built by Indian startup Sarvam that understands 22 Indic languages and can switch between them mid-sentence. It’s a feature that sounds small until you realize how rarely AI tools work well for Indians who code-switch between Hindi and English the way most people breathe.
This isn’t just a generic tech partnership. According to reporting by TechCrunch, both companies first announced this collaboration at India’s AI summit in February, and they’re treating this as a testing ground to see if there’s real appetite for an India-focused chatbot. HMD’s CEO Ravi Kunwar told TechCrunch the strategy is straightforward: get the app into users’ hands first, then worry about making them stick around later.
The Distribution Problem Nobody Talks About
Here’s the thing about AI adoption in emerging markets that venture capitalists love to discuss at panels but rarely solve: getting users to actually download your app is brutally hard when global AI tools already exist and work fine for English speakers.
Indus has been downloaded just over 293,000 times across platforms in India nearly three months after launch. ChatGPT, by comparison, hit 43.9 million downloads in the same country. That gap is enormous, and it illustrates why bundling might be the only distribution strategy that works at scale.
But HMD’s real move here isn’t the smartphone. The company held just 4% of India’s feature phone market in 2025 and doesn’t even rank in the top 15 for smartphones according to IDC. Feature phones, though? That’s where the real bet lies. HMD is planning to launch a feature phone with Sarvam AI integration soon, and that could actually move the needle.
Why Feature Phones Matter More Than You Think
India still uses a staggering number of feature phones. They’re affordable, the battery lasts forever, and for millions of people, they’re not a downgrade but a practical choice. If HMD can pack Indus into that segment, they’re not just selling a phone. They’re creating a distribution channel for an AI tool that actually speaks their users’ languages.
Sarvam itself has been building quiet momentum. The startup is reportedly working on a funding round at a $1.5 billion valuation and has focused heavily on enterprise partnerships, especially voice-based solutions. The Technology here is legit. The model powering Indus has 105 billion parameters, which puts it in the range of serious AI infrastructure.
The partnership is a direct answer to a real problem: English-language AI tools have limited reach in a market as large and linguistically diverse as India. You can have the smartest chatbot in the world, but if it doesn’t understand your language or the way you actually speak, it’s useless.
The Business Case Is Speculative But Interesting
Will this actually work? Nobody knows yet, and that’s what makes it worth watching. The numbers are discouraging on their face. Indus’s download count suggests the hunger for Indian AI isn’t as ravenous as the startup ecosystem wants to believe. But distribution through hardware could change that entirely.
What HMD and Sarvam are testing here matters less as a product launch and more as a proof of concept. If affordable hardware bundled with locally relevant AI can move adoption numbers in India, it becomes a playbook for how tech companies seed AI adoption in other emerging markets. And that’s actually valuable data, regardless of whether the Vibe 2 5G becomes a bestseller.
The real question isn’t whether Indus will become bigger than ChatGPT in India. It’s whether there’s room for any regional AI tool to compete if you can’t guarantee distribution, and whether hardware makers might be the only ones who can solve that problem.
