According to a report, India is looking to block Chinese firms from vending smartphones below the Rs. 12,000 segment. The efforts are directed towards helping the faltering local brands.
In an attempt to revive its flagging domestic sector, India seeks to forbid Chinese smartphone manufacturers from retailing products for less than Rs 12,000 ($150). This could hurt companies like Xiaomi Corp.
According to those with knowledge of the scene, the initiative aims to drive Chinese companies out of the second-largest mobile market worldwide’s lower section. They affirmed, while requesting anonymity because they were handling a delicate subject, that it corresponds with growing worries about high-volume companies like Realme and Transsion undercutting local manufacturers.
Exclusion from India’s entry-level market would be damaging to companies like Xiaomi and its competitors, who have depended on India more and more lately to fuel growth as their domestic market has been subjected to a number of COVID-19 lockdowns that have brutally hampered consumption. Smartphones under $150 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 industry researcher Counterpoint.
During the last few minutes of trading on Monday in Hong Kong, Xiaomi’s shares persisted to decline. It decreased by 3.6 percent, bringing this year’s loss to more than 35 percent. People said it’s unpredictable whether Prime Minister Narendra Modi’s administration will release any announcements or employ other unofficial methods to express its preference for Chinese businesses.
According to IDC’s analysts, if India imposes a ban on China-made mobile phones selling for less than $150, Xiaomi smartphone shipments might drop by 11-14 percent annually, or 20-25 million devices, and sales could drop by 4–5 percent. With 66 percent of its devices priced under $150, it represents 25 percent of the sector in India, which is Xiaomi’s most significant overseas market.
Xiaomi and its rivals, Oppo and Vivo, have already been exposed to intense financial scrutiny by New Delhi, which has resulted in tax demands and claims of money laundering. The government has already used unofficial means to outlaw communications equipment made by ZTE Corp. and Huawei Technologies Co. Although there is no official policy that forbids Chinese networking equipment, wireless operators are prompted to buy alternatives.
Since Apple Inc. and Samsung Electronics Co. charge more for their phones, the revision should not have an impact on them. Requests for remarks from Transsion, Realme, and Xiaomi representatives went unanswered. Inquiries from Bloomberg News went unanswered by the technology ministry of India’s spokespeople as well.
Tension between the neighbours
In the summer of 2020, India boosted pressure on Chinese enterprises after a battle between the two nuclear-armed rivals on a disputed Himalayan border resulted in the deaths of over a dozen Indian soldiers. As ties between the two countries deteriorate, it has subsequently banned more than 300 apps, including WeChat from Tencent Holdings Ltd. and TikTok from ByteDance Ltd.
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.
Free and fair competition
The majority of smartphones are being sold in India by Chinese companies, but Rajeev Chandrasekhar, the minister of state for information technology, told Business Standard last week that this market domination is not the result of 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 people, the government is still intimately requesting that Chinese executives develop local supply chains, distribution networks, and export commodities from India, indicating that New Delhi still values their investment extremely highly.
