Xiaomi Expresses Concern: Government Scrutiny of Chinese Firms Unsettles Smartphone Suppliers
Market Dominance: Xiaomi Holds Largest Share in India’s Smartphone Market at 18%
In correspondence with New Delhi, Xiaomi has raised concerns regarding the reluctance of smartphone component suppliers to establish operations in India, citing the heightened scrutiny of Chinese companies by the government as a key deterrent. The disclosure, outlined in a letter dated February 6 and corroborated by a source with direct knowledge of the matter, underscores Xiaomi’s apprehension amid the evolving regulatory landscape.
As the leading player in India’s smartphone market, commanding an impressive 18 percent share, Xiaomi emphasizes the importance of addressing industry challenges while advocating for measures to foster growth and innovation. In its communication, Xiaomi advocates for the consideration of manufacturing incentives and the reduction of import tariffs on specific smartphone components to incentivize domestic production.
Xiaomi’s manufacturing operations in India predominantly rely on locally sourced components, supplemented by imports from China and other regions. The letter serves as Xiaomi’s response to an inquiry from India’s information technology ministry, soliciting recommendations for advancing the country’s component manufacturing sector. As stakeholders navigate the intricacies of regulatory oversight and market dynamics, Xiaomi’s insights offer valuable perspectives on shaping the future trajectory of India’s smartphone ecosystem.
India ramped up scrutiny of Chinese businesses after a 2020 border clash between the two countries killed at least 20 Indian soldiers and four from China, disrupting investment plans of big Chinese companies and drawing repeated protests from Beijing.
Both Chinese companies deny any wrongdoing.Other than regulatory scrutiny of the likes of Xiaomi and Vivo, India has since 2020 also banned more than 300 Chinese apps, including ByteDance’s TikTok, and halted planned projects such as those planned by Chinese automakers BYD and Great Wall Motor.The source said many executives of Chinese electronics companies struggle to get visas to enter India, and their companies continue to face slow clearances for investments due to heavy scrutiny by New Delhi.
In the letter, Xiaomi’s Muralikrishnan also made a case for further lowering India’s import tariffs, just after New Delhi’s January 31 move to reduce import taxes on battery covers and phone camera lenses.Xiaomi is also asking India to reduce import tariffs on sub-components used in batteries, USB cables and phone covers, according to the letter.
Reducing the import tariffs could “increase India’s manufacturing competitiveness … in terms of costs”, Xiaomi said in the letter, but getting component manufacturers to set up shop in India would require bigger incentives.In January, India’s top industrial policy bureaucrat Rajesh Kumar Singh signalled that India could ease its heightened scrutiny of Chinese investments if the two countries’ border remains peaceful.
