The aim is to take China’s lower segment giants out of the world’s second-largest market and help local industry.
India is seeking to stop Chinese smartphone makers from selling devices cheaper than 12,000 rupees ($150) to revive its faltering domestic industry, dealing a blow to brands such as Xiaomi Corp.
The move is aimed at taking the Chinese giants out of the bottom segment of the world’s second-largest mobile phone market, according to people familiar with the matter. This coincides with growing concern over high-volume brands like Realme and Transsion undermining local manufacturers, they said, asking not to be identified discussing a sensitive topic.
Shutting out India’s entry-level market would hurt Xiaomi and its peers, which in recent years have increasingly relied on India to drive growth as their home market suffers a series of setbacks. Covid-19 lockdowns that have crippled consumption. Smartphones under $150 contributed a third of India’s sales volume for the quarter to June 2022, with Chinese companies accounting for up to 80% of those shipments, according to the market tracker Counterpoint.
Shares of Xiaomi extended losses in the final minutes of trading in Hong Kong on Monday. It slipped 3.6%, extending their decline this year to more than 35%. It is unclear whether Prime Minister Narendra Modi’s government will announce policies or use informal channels to convey its preference for Chinese companies, the people said.
New Delhi has previously subjected Chinese companies operating in the country, such as Xiaomi and rivals Oppo and Vivo, to scrutiny of their finances, leading to tax demands and allegations of money laundering. The government has already used unofficial means to ban telecommunications equipment from Huawei Technologies Co. and ZTE Corp. Although there is no official policy prohibiting Chinese networking equipment, mobile operators are encouraged to purchase alternatives.
This decision should not affect Apple Inc. or Samsung Electronics Co., which set a higher price for their phones. Representatives for Xiaomi, Realme and Transsion did not respond to requests for comment. Spokespersons for India’s technology ministry also did not respond to inquiries from Bloomberg News.
India stepped up pressure on Chinese companies in the summer of 2020 after more than a dozen Indian soldiers were killed following a clash between the two nuclear-armed neighbors on the disputed India border. Himalayas. It has since banned more than 300 apps, including WeChat from Tencent Holdings Ltd. and ByteDance Ltd.’s TikTok, as relations between the two countries fray.
Homegrown companies such as Lava and MicroMax accounted for just under half of India’s smartphone sales before new entrants from the neighboring country disrupted the market with cheap, feature-rich devices.
Chinese smartphone players now sell the vast majority of devices in India, but their market dominance has not been “based on free and fair competition”, India’s technology minister told Business Standard newspaper. last week. Recurring annual losses recorded by most Chinese handset makers in India, despite their leading position, add to criticism of unfair competition.
Privately, the government continues to ask Chinese leaders to build local supply chains, distribution networks and export from India, suggesting New Delhi is still very keen on their investment, the people said.