India seeks to restrict Chinese smartphone makers from selling devices cheaper than Rs. 12,000 to kickstart its faltering domestic industry, dealing a blow to brands including Xiaomi. The move is aimed at pushing Chinese giants out of the lower segment of the world's second-biggest mobile market, according to people familiar with the matter. It coincides with mounting concern about high-volume brands like Realme and Transsion undercutting local manufacturers, they said, asking not to be identified discussing a sensitive matter.
Exclusion from India's entry-level market would hur and its peers, which in recent years have increasingly relied on India to drive growth while their home market endures a series of Covid-19 lockdowns that crippled consumption. Smartphones under Rs. 12,000 contributed to a third of India's sales volume for the quarter through June 2022, with Chinese companies accounting for up to 80 percent of those shipments, according to market tracker Counterpoint.
During the last few minutes of trading on Monday in Hong Kong, Xiaomi's shares continued to decline. It decreased by 3.6 percent, bringing this year's loss to more than 35 percent. The insiders said it's uncertain whether Prime Minister Narendra Modi's administration will make any announcements or use unofficial methods to express its preference for Chinese businesses.
Xiaomi and rival Chinese companies Oppo and Vivo have already been the target of intense financial scrutiny by New Delhi, which has resulted in tax demands and claims of money laundering. The government has used illegal methods in the past to outlaw Huawei and ZTE telecom equipment. Although there isn't a formal policy that forbids Chinese networking equipment, wireless operators are urged to buy alternatives.
Due to their higher phone prices, Apple and Samsung shouldn't be impacted by the change. Requests for comment from Transsion, Realme, and Xiaomi representatives went unanswered. Inquiries from Bloomberg News went unanswered by the technology ministry of India's spokespeople as well.
India amped up pressure on Chinese firms in the summer of 2020 after more than a dozen Indian soldiers died following a clash between the two nuclear-armed neighbours on a disputed Himalayan border. It has since banned more than 300 apps, including Tencent's and ByteDance's as relations between the two countries fray.
Before new competitors from the neighbouring country upset the market with affordable and feature-rich smartphones, domestic manufacturers like Lava and Micromax accounted for slightly less than half of India's smartphone sales.
The majority of smartphones are currently sold in India by Chinese companies, but the junior IT minister of India told the Business Standard newspaper last week that their market domination was not "based on free and fair competition." Despite their dominant position, the majority of Chinese handset manufacturers in India consistently incur annual losses, which fuel accusations of unfair competition.
According to the persons, the government is still privately requesting that Chinese executives develop local supply chains, distribution networks, and export goods from India, indicating that New Delhi still values their investment extremely highly.
