Smartphone shipments in India surged 84 percent in the second quarter of 2014 compared with the same time last year hitting 18.42 million units, according to IDC. The sub-$200 smartphones accounted for 81 percent of second quarter shipments, highlighting the potential in the low-end market.
Analysts said the prospects for Mozilla's device in the world's third-largest economy are huge considering smartphones have only a 29 percent market share.
"The penetration of smartphones is very low, there is a lot of space for growth to cannibalize feature phones," Karan Thakkar, senior mobile and tablet market analyst at IDC, told CNBC by phone.
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But he said the low specifications of the Cloud FX could "eventually put people off".
The Cloud FX has a 1.0 GHz processor and expandable memory of up to 4GB. It also has Bluetooth and Wi-fi capabilities, a 2 megapixel camera and a 3.5 inch screen.
Samsung has the biggest smartphone market share in India, but like in China, local players are eating away at the Korean electronics company's dominance. Nokia was once the leading vendor, but Indian companies such as Karbonn and Micromax have taken its place. The rising competition is likely to be felt by Firefox as some of the other brands move to use Google's Android OS, analysts warned.
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"Nokia's market share is slowly drying up and that is leaving a huge gap in the market that Samsung isn't able to fill completely. Local brands are moving very fast to manufacture smartphones with Android," Daniel Gleeson, mobile analyst at IHS, told CNBC by phone.
Firefox OS has its own app store known as the Marketplace though it is not as extensive as Google's or Apple's offerings. While this is unlikely to be a major concern as Indian consumers purchase their first smartphones, eventually Firefox will need to up its game to stay competitive, according to analysts.
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"The lower end users want a basic ecosystem, so as long as Firefox does the basics well it should be fine," Neil Mawston, mobile analyst at Strategy Analytics, told CNBC in a phone interview.
"In the longer term we will expect Firefox to improve and increase the apps ecosystem that they offer."
- By CNBC's Arjun Kharpal