In an effort to revive its flagging domestic sector, India wants to prohibit Chinese smartphone manufacturers from selling products for less than Rs. 12,000, which will hurt companies like Xiaomi.
According to those with knowledge of the situation, the effort is intended to drive Chinese goliaths out of the lower end of the second-largest mobile market in the world.
They claimed, asking not to be named because they were addressing a delicate subject, that it coincided with growing worries about high-volume companies like Realme and Transsion undercutting local manufacturers.
Exclusion from the entry-level market in India would be detrimental to Xiaomi and its competitors, who have relied on India more and more in recent years to fuel growth as their domestic market has been subjected to a number of Covid-19 lockdowns that have severely hampered consumer spending.
According to industry researcher Counterpoint, Chinese companies shipped up to 80% of the smartphones under Rs. 12,000 which made up a third of India’s sales volume during the three months ending in June 2022.
In the last moments of Monday’s trading in Hong Kong, Xiaomi’s shares continued to decline. It dropped 3.6 percent, bringing this year’s loss to over 35 percent.
The insiders said it’s unclear whether the administration of Prime Minister Narendra Modi will make any formal announcements or use unofficial routes to express its preference for Chinese companies.
Chinese businesses operating in the nation, like Xiaomi and rivals Oppo and Vivo, have already been subject to intense financial scrutiny by New Delhi, which has resulted in tax demands and suspicions of money laundering.
The government has already used clandestine methods to forbid ZTE and Huawei communications equipment. Wireless providers are urged to buy alternatives even though there isn’t a formal regulation that forbids Chinese networking equipment.
Apple and Samsung, whose phones cost more, shouldn’t be impacted by the change. Requests for comment from representatives of Xiaomi, Realme, and Transsion went unanswered. Inquiries from Bloomberg News went unanswered by the ministry of technology in India.
After a clash between the two nuclear-armed neighbors on a contentious Himalayan border that resulted in the deaths of more than a dozen Indian soldiers, India increased pressure on Chinese businesses in the summer of 2020.
In light of the deteriorating relations between the two nations, it has subsequently blocked more than 300 apps, including Tencent’s WeChat and ByteDance’s TikTok.
Before new entrants from the neighboring country upset the industry with low-cost, feature-rich smartphones, domestic businesses like Lava and Micromax made up just under half of India’s smartphone sales.
The majority of smartphones are currently sold by Chinese companies in India, but the junior IT minister of India recently said that this market domination was not “based on free and fair competition.”
Despite holding the top position in India, most Chinese handset manufacturers consistently incur annual losses, which fuels accusations of unfair competition.
Private requests from the government to Chinese executives to develop local supply chains, distribution networks, and export from India imply that New Delhi still values their investment, according to the sources.
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