India’s government has proposed a sweeping rewrite of smartphone security rules that promises to change how phones work in the world’s second largest mobile market and that matters far beyond security.
On January 11, a Reuters exclusive report said that manufacturers may soon be required to submit proprietary source code to government labs, restrict background access to features like location and sensors, and notify authorities before major software updates.
Opponents including Apple, Google, Samsung and Xiaomi warn that these steps are without global precedent and could disrupt platform innovation, but for advertisers this moment is less about code and more about data and the fragile economics of mobile marketing.
India is a mobile country in every sense of the words. It had more than 750 million devices and approximately over a billion mobile connections as of 2025, and hundreds of millions of those are active internet users with smartphones providing the portal to millions of daily engagements online. In this context, advertising is not a marginal channel but the backbone of the digital economy.
The country’s advertising industry crossed the Rs 1 lakh crore mark in fiscal 2025 and digital channels accounted for almost half of that spend, reflecting how deeply brands have tied budgets to mobile-first behaviours. According to industry estimates, mobile platforms accounted for over 70 percent of total digital media spends in 2025, reinforcing how much of advertising in India is consumed on mobile devices.
Based on industry research, the India mobile advertising market itself was valued at roughly USD 7.6 billion in 2024 (final 2025 tallies are yet to come in) and is projected to grow strongly through the decade as smartphone penetration, affordable data and mobile content consumption continue rising.
In practical terms this means that the behaviour of phones and the way they collect signal data is not an esoteric technical detail but a core element of how ads are bought, targeted and measured.
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The advertising ecosystem has been built on an assumption that phones continuously emit signals about location, app usage, browsing patterns and sensor interactions that feed into optimisation engines for targeting, bidding and attribution.
If background access to microphones, cameras, location or other sensors is restricted or requires explicit permissions, that assumption weakens. When the signal supply shrinks, the precision of targeting and the quality of audience segments erode.
Programmatic systems, which thrive on volumes of micro-signals, will have to recalibrate. Targeting models that once inferred behaviour from subtle background cues may have to rely more on deterministic data from logged-in engagements or explicit user actions.
For advertisers this shift is real and immediate. Retargeting pools may become smaller and less reliable. Lookalike audiences drawn from background data could lose predictive power. Frequency capping and cross-session optimisation may feel noisier as the threads that once stitched an individual user’s journey together become thinner.
Attribution models that depend on device-level breadcrumbs will get noisier because some of those breadcrumbs are exactly the sorts of background signals that these rules would curb.
Android, which powers most of the smartphones in India, is at the heart of this transformation. Historically, Android’s openness enabled deep integrations for SDKs, analytics and attribution frameworks that rely on permissions granted once and then quietly operate in the background.
The new rules threaten to make those signal pathways more visible, more gated and more dependent on explicit user consent. Even if implementation is phased or negotiated, the direction of travel is clear: platform features that were once assumed as default behaviours will now need justification and user acknowledgement.
This affects not just third-party developers but manufacturers themselves. OEM advertising inventory on Android devices (the pre-installed apps, curated feeds and system notifications that generate reach and data) has been a quietly lucrative channel for both device makers and marketers.
Requiring those apps to be uninstallable and permissions to be more transparent undermines the “ambient” nature of that inventory. If users can remove or restrict that software with ease, the scale and stickiness of that inventory diminish. Inventory that was once near-default becomes optional and that changes its value.
Apple enters this moment with a philosophical advantage because iOS has already normalised a foreground-first permissions model. While iOS’s share of devices in India may be smaller than Android’s, the fact that its privacy posture aligns more closely with what India is now proposing positions it as a psychological and regulatory model for ad tech.
Apple’s advertising formats and measurement tools were built around explicit consent and on-device processing, and in an environment where opaque background signalling is no longer guaranteed, Apple’s constraints start to look less like limitations and more like compliance advantage.
As mobile ad markets mature, the balance between behavioural and contextual signals will shift. When behavioural tracking weakens, relevance must come from the context that can be observed without deep profile inference.
What app is the user actively engaging with, what content are they consuming in the moment, what explicit interests have they declared through engagement all become more important than inferred patterns over time.
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Contextual targeting is not new, but in an environment where background signals are restricted it becomes marginally more reliable than behavioural proxies.
Location based advertising illustrates this change clearly. Many proximity campaigns today rely on always-on location data to measure footfall and trigger offers in real time. Under tighter rules, that ambient location becomes harder to maintain.
Users will grant access for navigation or specific uses but are less likely to leave high-precision location permissions enabled as a matter of course. Location targeting will not disappear, but it will become episodic, opt-in, and therefore smaller in scale and higher in cost.
Measurement and attribution are arguably where the pain concentrates because they sit at the intersection of targeting, optimisation and outcomes. Multi-touch attribution models, which once stitched together cross-session gestures, are challenged when some sessions do not emit the same continuous signals.
Marketers will increasingly be forced to accept probabilistic models, incrementality tests and hybrid measurement frameworks that blend deterministic and modelled data rather than relying on precise device-level markers that internet ad tech has taken for granted.
None of this is to suggest that advertising in India stops working. It continues to grow. The sheer scale of smartphone usage, the ongoing surge in mobile internet access, and the relentless expansion of digital ad budgets ensure that mobile will remain the primary battleground for brand and performance marketers.
But the mechanics are shifting.
Less implicit signal, more explicit consent. Less background data, more foreground relevance.
Mobile advertising will not disappear, but it will be practiced on different assumptions and with different operational realities.
For marketers and agencies this is a moment of strategic adjustment. It is a time to audit dependencies on background signal flows, to invest more in first-party data capture and consent management, and to rethink how performance measurement frameworks validate outcomes.
The industry has navigated regulatory and platform upheavals before, whether through privacy reforms, cookie deprecation or major platform redesigns. What makes this moment distinctive is that the change is happening below the app layer, inside the operating system itself, in the part of the stack that has remained relatively untouched until now.
India’s smartphone security rewrite is not just about cyber threats. It’s also an implicit challenge to the assumptions that underlie mobile advertising.
The phones that power the world’s largest mobile audience are also the instruments that drive the world’s fastest growing digital ad market. When the data that flows from those instruments changes, the market has to recalibrate how it thinks about relevance, reach and measurement.
The proposed rules may be about security, but the effects reach into advertising’s core mechanics. In this new world, consent and context may matter more than the invisible signals that once powered the industry.