India seeks to restrict Chinese smartphone makers from selling devices cheaper than 12,000 rupees ($150) to kickstart its faltering domestic industry, dealing a blow to brands including Xiaomi Corp, Bloomberg reported.
The news agency quoting people familiar with the matter, said, the move is aimed at pushing Chinese giants out of the lower segment of the world’s second-biggest mobile market.
It coincides with mounting concern about high-volume brands like Realme and Transsion undercutting local manufacturers, the report quoted the sources as saying.
Exclusion from India’s entry-level market would hurt Xiaomi and its peers, which in recent years have increasingly relied on India to drive growth while their home market endures a series of COVID lockdowns that crippled 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% of those shipments, according to market tracker Counterpoint.
The report quoted the people further said Xiaomi’s shares extended losses in the final minutes of trading in Hong Kong on Monday. It slid 3.6%, extending their decline this year to more than 35%. It’s unclear whether Modi government will announce any policies or use informal channels to convey its preference to Chinese companies.
New Delhi has already subjected Chinese firms operating in the country, such as Xiaomi and rivals Oppo and Vivo, to close scrutiny of their finances, which has led to tax demands and money laundering allegations. The government has previously employed unofficial means to ban Huawei Technologies Co. and ZTE Corp. telecom equipment. While there’s no official policy prohibiting Chinese networking gear, wireless carriers are encouraged to purchase alternatives, the Bloomberg report said.
Chinese smartphone players now sell the vast majority of devices in India, but their market dominance has not been “on the basis of free and fair competition,” India’s junior tech minister told the Business Standard newspaper last week. Recurring annual losses posted by most Chinese handset makers in India, despite their leading position, add to criticism of unfair competition.
In private, the government continues to ask Chinese executives to build local supply chains, distribution networks and export from India, suggesting New Delhi still very much wants their investment, the news agency report quoted the sources further saying.