To revive its faltering local sector, India wants to prohibit Chinese smartphone makers from selling gadgets for less than 12,000 rupees ($150), a blow to firms like Xiaomi Corp.
According to people familiar with the situation, the action is intended to push Chinese conglomerates out of the bottom part of the world’s second-largest mobile market. It correlates with growing worry over high-volume brands like Realme and Transsion undercutting local producers, they added, declining to be identified because they were addressing a sensitive topic.
Exclusion from India’s entry-level market would damage Xiaomi and its colleagues, who have increasingly relied on India to fuel growth in recent years as their home market has been hobbled by a series of Covid-19 lockdowns. According to market tracker Counterpoint, smartphones priced under $150 accounted for a third of India’s sales volume for the quarter ending June 2022, with Chinese businesses accounting for up to 80% of those shipments.
Xiaomi’s shares fell further in the final minutes of trade in Hong Kong on Monday. It fell 3.6 percent, bringing the year’s drop to more than 35 percent. According to the sources, it is uncertain whether Prime Minister Narendra Modi’s government will publish any regulations or use informal channels to express its preference for Chinese firms.
New Delhi has already subjected Chinese enterprises operating in the country, such as Xiaomi and rivals Oppo and Vivo, to extensive financial inspection, leading to tax requests and money laundering charges. The government has already used unofficial measures to prohibit Huawei Technologies Co. and ZTE Corp. telecom equipment. While there is no official policy that prohibits cellular carriers from purchasing Chinese networking equipment, they are encouraged to do so.
Apple Inc. and Samsung Electronics Co., who charge greater prices for their phones, should be unaffected by the change. Representatives from Xiaomi, Realme, and Transsion did not reply to requests for comment. Officials from India’s technology ministry did not respond to Bloomberg News enquiries.
In the summer of 2020, India increased pressure on Chinese enterprises after more than a dozen Indian soldiers were killed in a battle between the two nuclear-armed rivals on a Himalayan border. It has now blocked over 300 apps, including Tencent Holdings Ltd.’s WeChat and ByteDance Ltd.’s TikTok, as relations between the two countries deteriorate.
Before new entrants from the neighbouring country upset the industry with cheap and feature-rich smartphones, homegrown businesses such as Lava and MicroMax accounted for just under half of India’s smartphone sales.
Chinese smartphone players currently sell the vast majority of smartphones in India, but their market domination has not been “based on free and fair competition,” India’s junior technology minister told the Business Standard newspaper last week. The recurring annual losses made by most Chinese handset producers in India, despite their dominant position, contribute to the allegation of unfair competition.
According to the persons, the government continues to push Chinese executives to create local supply chains, distribution networks, and export from India in private, implying that New Delhi still wants their investment.