India wants to stop Chinese smartphone manufacturers from selling products for less than Rs 12,000 in an effort to revive its flagging local industry, which will hurt companies like Xiaomi. According to those with knowledge of the situation, the initiative aims to drive Chinese companies out of the second-largest mobile market worldwide's lower segment. Bloomberg said that they claimed, while requesting anonymity, 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 detrimental to Xiaomi and its competitors, who have relied on India more and more recently to fuel growth as their domestic market has been subjected to a number of Covid-19 lockdowns that have severely hampered consumption. According to industry researcher Counterpoint, shipments of smartphones priced less than Rs 12,000 made up to 80% of the sales volume in India for the three months ending in June 2022. During the last few minutes of trading on Monday in Hong Kong, Xiaomi's shares continued to decline. It decreased by 3.6%, bringing this year's loss to more than 35%. 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.
In the summer of 2020, India increased pressure on Chinese businesses after a confrontation between the two nuclear-armed neighbours on a disputed Himalayan border resulted in the deaths of over a dozen Indian soldiers. As ties between the two nations deteriorate, it has since blocked more than 300 apps, including Tencent's WeChat and ByteDance's TikTok. 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. 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 its investment extremely highly.
