Chinese smartphone manufacturers currently supply the overwhelming bulk of smartphones in India. Now, India is seeking to ban Chinese phones that are cheaper than ₹12,000.
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To help revive its struggling domestic sector, India wants to prohibit Chinese smartphone manufacturers from selling phones for less than 12,000 rupees ($150). This will hurt companies like Xiaomi Corp, reports NDTV.
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, while requesting anonymity because they were addressing 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 detrimental to Xiaomi and its counterparts, 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 under $150 made up up to 80% of the sales volume in India during the quarter through 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 percent, bringing this year’s loss to more than 35 percent. According to the sources, it is uncertain whether Prime Minister Narendra Modi’s administration will publicly declare any policy or use unofficial methods to express its preference to Chinese businesses.
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Xiaomi and its peers Oppo and Vivo have already been exposed 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 outlaw communications equipment made by ZTE Corp. and Huawei Technologies Co. Although there is not a formal policy that forbids Chinese networking equipment, wireless carriers are urged to procure alternatives.
Since Apple Inc. and Samsung Electronics Co. charge more for their phones, the change should not have an impact on them.
In the summer of 2020, India increased pressure on Chinese businesses after a clash between the two nuclear-armed rivals on the Himalayan boundary resulted in the deaths of over a dozen Indian soldiers. As ties between the two nations deteriorate, it has subsequently blocked more than 300 apps, including WeChat from Tencent Holdings Ltd. and TikTok from ByteDance Ltd.
Before new competitors from the neighboring country upset the market with affordable and feature-rich smartphones, domestic manufacturers like Lava and MicroMax accounted for slightly less than 50% of India’s smartphone sales.
Chinese smartphone manufacturers currently supply the overwhelming bulk of smartphones in India, but their dominance is not based on “on the basis of free and fair competition,” India’s junior technology minister told the Business Standard newspaper last week. Despite their dominant position, most Chinese handset producers in India report recurrent annual losses, fueling accusations of unfair competition.
According to the individuals, 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 their investment pretty highly.